Diversified engineered products manufacturer
Leggett & Platt Inc.
) has recently made a series of big-ticket announcements along with
Tempur Sealy International Inc.
) - a leading provider of bedding products.
As Tempur Sealy announced its decision to halt innerspring
components production in the U.S., Leggett has acquired three of
its U.S. innerspring component production facilities and equipment
along with the related working capital. The assets were bought for
$48.0 million, open to working capital adjustments.
Moreover, Leggett will be the sole long-term supplier of wire-based
innersprings and boxsprings in Canada and the U.S. for Tempur
Sealy. This significantly enhances the supply connections between
Tempur Sealy's exit from innerspring parts production will help it
to focus on product innovation, brand development and working
capital management. With Leggett's support, the company will have
greater flexibility with regards to product developments.
On the other hand, Leggett is positive on the long-term supply deal
with Tempur Sealy as it expects incremental production to improve
its economies of scale. Additionally, the company expects this
long-term deal to help optimize production across a larger asset
Further, Leggett expects this partnership to augment sales by 2%
within a year. However, earnings per share are anticipated to
remain unaffected by the deal. We believe that this strategic
agreement will significantly benefit the companies and position
them well on a multi-year path of planned product development.
Leggett currently carries a Zacks Rank #3 (Hold). Other
better-ranked retail stocks include
Citi Trends, Inc.
), each carrying a Zacks Rank #1 (Strong Buy).
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LEGGETT & PLATT (LEG): Free Stock Analysis
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