Carthage-based Leggett & Platt announced on Wednesday, Nov. 7, that it was spending $1.25 billion to acquire the Georgia-based Elite Comfort Solutions, a leader in the area of specialized foam technology for bedding and furniture applications.
ECS is a portfolio company of Arsenal Capital Partners.
Leggett & Platt said the transaction has been approved by the Board of Directors of Leggett & Platt and is expected to close in January 2019, subject to customary closing conditions and regulatory approvals.
In a written release, Leggett said ECS’s annual sales for the fiscal year ended Sept. 30, 2018 were $611 million.
“With 16 facilities across the United States, ECS operates a vertically integrated model, producing specialty foam, developing many of the chemicals and additives used in foam production, and manufacturing private-label finished products,” Leggett said. “These innovative specialty foam products include finished mattresses sold through both traditional and online channels, mattress components, mattress toppers and pillows, and furniture foams.
“ECS is expected to generate double-digit sales growth and strong EBITDA margins that should be accretive to company average margins. Due to impacts from purchase accounting, ECS is expected to have a slightly negative effect on consolidated EBIT margins.”
Leggett said once the transaction is complete, ECS will become a separate business unit and operate within the Residential Products segment.
“The ECS management team will continue to lead the business,” Leggett said. “Leggett & Platt has a history of successfully acquiring and integrating companies and looks forward to welcoming ECS’s team members to the Leggett & Platt family. Leggett & Platt plans to maintain all 16 of ECS’s manufacturing and warehousing facilities.”
CEO Comments
Leggett President and CEO Karl Glassman said the combination of the companies will become a leading provider of products in the bedding industry and help Leggett gain “critical capabilities in proprietary foam technology, along with scale in the production of private-label finished mattresses.”
“ECS is uniquely qualified to provide e-commerce, retail and OEM customers the most advanced technology solutions in specialty foams today,” Glassman said. “With our best-in-class manufacturing capabilities and ECS’s proprietary and patented technology, we plan to capitalize on current and future trends in the market. Those trends include growth of the online mattress channel, the emergence of boxed bed brands, and those brands’ and traditional mattress manufacturers’ increasing use of hybrid and specialty grade foam technology in compressed and conventional mattresses. We look forward to benefiting from ECS’s technical expertise and working together to implement manufacturing best practices across the acquired operations. We welcome the talented team of ECS to Leggett & Platt and are excited to work closely together to better serve our customers, drive growth and deliver strong value creation for our shareholders.”
Chris Chrisafides, Chief Executive Officer of Elite Comfort Solutions, said his company admires Leggett’s storied history, global footprint and leading product portfolio.
“Joining forces with Leggett & Platt enables us to provide a wider range of products and services to both companies’ valued customers,” Chrisafides said. “I look forward to working closely with Karl, Perry Davis, and the entire Leggett & Platt team as we work towards a seamless integration of our two companies.”
John Televantos, a Partner at Arsenal, added “We have built ECS together with our management team to be the innovator in the polyurethane foam and bedding markets. We are delighted to see a great permanent home for ECS and its employees. Leggett & Platt is uniquely capable of continuing and strengthening the path we set for ECS, and we expect that the long history and great value they bring to the bedding industry will be enhanced with this acquisition.”
