Somnigroup International disclosed Monday that it has signed a definitive agreement to acquire Leggett & Platt Inc. in an all-stock transaction. Under the deal, each Leggett share will convert into 0.1455 shares of Somnigroup common stock.
The boards of both companies unanimously approved the agreement, which was signed April 13 by Somnigroup, Leggett, and Somnigroup's merger subsidiary Sparrow Unity Corporation. At closing, the sub merges into Leggett, leaving Leggett as a direct wholly owned Somnigroup subsidiary.
The combination is a vertical play: Somnigroup, the world's largest bedding company, is folding in a diversified component manufacturer that already supplies it.
Closing is conditioned on Leggett shareholder approval, expiration or termination of the HSR waiting period, specified foreign competition and investment clearances, effectiveness of a Somnigroup Form S-4 registration statement, and NYSE listing approval for the newly issued shares. The parties intend the merger to qualify as a tax-free reorganization under Section 368(a) of the Internal Revenue Code.
The termination provisions give the deal some asymmetry. Leggett owes a $64 million termination fee in specified circumstances; Somnigroup owes $80 million if the deal fails on regulatory grounds — a structure that puts a price on antitrust risk and gives Leggett a cushion if clearances fall through.
Cleary Gottlieb Steen & Hamilton is advising Somnigroup. Latham & Watkins is advising Leggett & Platt.
The deal will need to clear HSR review and specified foreign competition and investment approvals before closing — conditions the 8-K flags expressly.