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Fitch puts Tempur Sealy on watch
Fitch Ratings said it placed its ratings for Tempur Sealy International, Inc. (TPX) and Tempur-Pedic Management, LLC, including the long-term issuer default ratings at BB+, on rating watch negative.
The RWN follows Tuesday’s news that TPX agreed to buy Mattress Firm Group Inc. in a deal valued at about $4 billion. The transaction is anticipated to close in the second half of 2024, subject to customary closing conditions, including regulatory approval.
“The RWN reflects the potential for leverage to be sustained above ratings sensitivities, 12 to 24 months post the close of the transaction which could lead to a negative outlook or negative rating outcome. Nevertheless, Fitch could affirm the ratings on increased visibility for EBITDA and EBITDAR leverage to return to under 3x and low 4x respectively within 12 to 24 months. The resolution of the rating watch could exceed six months,” the agency said in a press release.
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