Somnigroup International’s proposed acquisition of Leggett & Platt puts L&P’s board “in a precarious situation,” an industry analyst says.
Peter Keith, a senior research analyst for Piper Sandler, has done more research on the proposed acquisition, which he views as “highly compelling” for SGI, “with potential to be highly accretive both immediately and over several years.”
He acknowledges “various unknowns” about the proposed deal, including whether L&P will choose to accept it, but sees SGI as being in a strong position to prevail.
“We believe the L&P board will either negotiate a slightly higher acquisition price or face a (potentially losing) proxy battle should it choose to reject the proposal,” Keith wrote in a recent industry report. In the event of a proxy fight, the L&P shareholders could approve the acquisition, “considering the large number of shares held by passive index funds,” by the May 2026 shareholder meeting.
“We also note,” he added, “SGI is an important customer to L&P and could choose to move its business away from L&P over time if the proposal is rejected.”
Keith said his research, which included channel conversations and financial modeling, indicates that the proposed acquisition would create “substantial value” for SGI.
“SGI is potentially buying L&P near the bottom of the cycle,” and SGI shares “are near an all-time high valuation while L&P shares are near an all-time low — which makes the all-stock acquisition nicely accretive before synergies,” Keith said.
He also said the proposed acquisition would enhance SGI’s vertical integration, not just for existing innerspring production but also by moving some or all of SGI’s large adjustable bed base business over to L&P.
While the deal would likely need regulatory approval, “we believe this acquisition is not nearly as onerous as the Mattress Firm acquisition. And SGI has shown an ability to navigate Federal Trade Commission concerns,” Keith wrote.
