Tempur Sealy (TPX) To Acquire Dreams, UK's Leading Specialty Bed Retailer

Tempur Sealy International, Inc. (NYSE: TPX, "Tempur Sealy" or the "Company") today announced it has executed an agreement to acquire Dreams, the leading specialty bed retailer in the United Kingdom, primarily from an affiliate of Sun Capital Partners, Inc. The transaction will accelerate Tempur Sealy's growth in the largest European bedding market and sixth largest economy in the world.

The transaction price is approximately $475 million, less net debt and any working capital deficit, and the transaction is expected to be accretive to Tempur Sealy's EPS by approximately $0.20 before synergies in the first year post-acquisition.

Dreams has developed a successful multi-channel sales strategy, with over 200 brick and mortar retail locations, an industry-leading online channel, as well as manufacturing and delivery assets. Dreams generated sales of approximately $400 million and EBITDA of approximately $75 million for the year ending December 31, 2020. Dreams is expected to generate annual sales of approximately $450 million in the first year post-acquisition.

Dreams will be operated as an independent business unit and led by the current management team. It is expected to complement the Company's existing UK Tempur operations and its recently-formed Sealy UK joint venture operations.

After the transaction closes, Tempur Sealy's annualized worldwide direct-to-consumer business is expected to reach $1 billion in sales and its international segment will represent over 20% of consolidated sales. The transaction will be financed through a combination of cash on hand and bank borrowings. The Company's pro forma leverage is expected to be slightly less than 2 times adjusted EBITDA as defined in the Company's credit agreement. Finally, the Company today entered into an amendment of its Senior Credit Facility which increases its liquidity by $300 million.

The transaction is expected to close in the third quarter of 2021, subject to receipt of regulatory approval from the UK Financial Conduct Authority.

Tempur Sealy International, Inc. Chairman and CEO Scott Thompson commented, "Dreams has created a strong retailer brand and business model, known for its outstanding products and customer service. We have worked with Dreams for many years and they are one of the most talented retailers we service. They have consistently demonstrated best-in-class web marketing, customer service and sales capabilities. This acquisition better positions both organizations to service customers and bring innovative products to market. We look forward to welcoming the entire Dreams organization to the Tempur Sealy family."

Thompson continued, "This transaction is consistent with our stated strategy of acquiring companies when we see their addition as mutually beneficial and accretive to long-term shareholder value. We expect, over time, to leverage Tempur Sealy's global scale to realize synergy opportunities and long-term sales growth."

Dreams CEO Mike Logue commented, "We are delighted to be joining the Tempur Sealy family. Today marks a milestone for Dreams. It is recognition of the transformation we have delivered and an endorsement of our customer-focused strategy, our culture and our values. With Tempur Sealy, we expect to drive our growth strategy and build on our position as the most recommended specialist bed retailer in the UK. I would like to take this opportunity to thank our 2,000 colleagues for their hard work, dedication and commitment. Together we will continue to optimize what we make, sell and deliver to provide better sleep for all of our customers."

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