XML 24 R10.htm IDEA: XBRL DOCUMENT
v3.25.2

Acquisitions and Divestitures | 6 Months Ended
--- | ---
Jun. 30, 2025
Business Combination, Asset Acquisition, Transaction between Entities under Common Control, and Joint Venture Formation [Abstract] |
Acquisitions and Divestitures | Acquisitions and Divestitures Acquisition of Mattress Firm Group Inc. On February 5, 2025, the Company completed its Mattress Firm Acquisition for an aggregate purchase price of approximately $5.1 billion, net of cash acquired of $0.3 billion. The aggregate purchase price consisted of $3.1 billion in cash and approximately 34.2 million shares of the Company's common stock valued at $65.65 per share, which represents the simple average of the opening and closing price per share of the Company's common stock on the New York Stock Exchange (the "NYSE") on the trading day immediately prior to the date of acquisition, with the value of any fractional shares paid in cash. In connection with the consummation of the merger, the Company borrowed $625.0 million of its Delayed Draw Term A Loan and $679.5 million of revolving commitments under its senior credit facility. In addition, approximately $1,592.0 million of proceeds in respect of the Term B Loan were released from escrow. The proceeds of this financing were collectively used to fund a portion of the cash consideration, the repayment of Mattress Firm's debt and the payment of certain fees and expenses related to the merger. The Mattress Firm Acquisition enhances the Company's global omni-channel strategy and enables a seamless consumer experience, among other things. Mattress Firm operates as a separate business segment within the Company. The Company accounted for this transaction as a business combination in accordance with Accounting Standards Codification (“ASC”) 805, Business Combinations. Mattress Firm's financial results for the periods from April 1, 2025 through June 30, 2025 and February 5, 2025 through June 30, 2025 (the "stub period") are included in the Company's Condensed Consolidated Financial Statements for the three and six months ended June 30, 2025, respectively. On May 1, 2025, the Company completed the previously announced divestiture of 73 Mattress Firm retail locations and the Company's Sleep Outfitters subsidiary, which includes 103 specialty mattress retail locations and seven distribution centers to MW SO Holdings Company, LLC ("Mattress Warehouse"). In the three months ended June 30, 2025, the Company recorded a $13.9 million loss on disposal of business associated with the divestiture, net of proceeds of $9.0 million. The Company does not expect the divestiture to have a material impact on its results of operations for the twelve months ended December 31, 2025. The divestiture of Sleep Outfitters was not classified as assets and liabilities held for sale in the Company's Consolidated Balance Sheets as of December 31, 2024 due to the Mattress Firm Acquisition being contingent upon regulatory approval and the potential for the Company's plan of divestiture to change. Preliminary Purchase Price Consideration The preliminary purchase price of Mattress Firm as of February 5, 2025 consists of the following items:
(in millions) |
Cash | $ | 3,091.5 |
Common stock of the Company (1) | 2,245.1 |
Effective settlement of pre-existing relationships (2) | 71.6 |
Total consideration | $ | 5,408.2 |
Cash acquired | (267.0) |
Net consideration transferred | $ | 5,141.2 |
(1) | The stock consideration of 34.2 million shares of Somnigroup common stock represents a value of $65.65 per share, which is the simple average of the opening and closing price per share of the Company's common stock on the NYSE on the business day immediately prior to the date of acquisition. This amount includes stock consideration to Mattress Firm employees for equity awards converted into the right to receive merger consideration.
(2) | Represents the effective settlement of Mattress Firm outstanding payables to Somnigroup, net of incentives receivable. No gain or loss was recognized on this settlement.
Preliminary Purchase Price Allocation The preliminary allocation of the purchase price is based on the fair values of the assets acquired and liabilities assumed as of February 5, 2025. The components of the preliminary purchase price allocation are as follows:
(in millions) | Initial Allocation of Consideration |  | Measurement Period Adjustments |  | Updated Preliminary Allocation
Accounts receivable, net | $ | 43.1 |  |  | $ | (1.6) |  |  | $ | 41.5 |
Inventories | 313.1 |  |  | — |  |  | 313.1 |
Prepaid expenses and other current assets | 66.7 |  |  | (1.1) |  |  | 65.6 |
Assets held for sale | 37.6 |  |  | (1.7) |  |  | 35.9 |
Property and equipment | 193.1 |  |  | 64.3 |  | (1) | 257.4 |
Operating lease right-of-use assets | 1,254.1 |  |  | 17.9 |  | (1) | 1,272.0 |
Other non-current assets | 66.6 |  |  | (13.9) |  |  | 52.7 |
Indefinite-lived trade names | 1,660.0 |  |  | — |  |  | 1,660.0 |
Goodwill | 3,473.0 |  |  | 3.0 |  |  | 3,476.0 |
Preliminary fair value of assets acquired | $ | 7,107.3 |  |  | $ | 66.9 |  |  | $ | 7,174.2 |
Accounts payable | (113.7) |  |  | — |  |  | (113.7) |
Accrued expenses and other current liabilities | (255.7) |  |  | (7.2) |  |  | (262.9) |
Income taxes payable | (2.4) |  |  | — |  |  | (2.4) |
Liabilities held for sale | (32.7) |  |  | — |  |  | (32.7) |
Long-term operating lease obligations | (1,287.2) |  |  | (18.6) |  | (1) | (1,305.8) |
Deferred tax liability | (194.2) |  |  | (64.7) |  | (2) | (258.9) |
Other non-current liabilities | (59.6) |  |  | 13.9 |  |  | (45.7) |
Long-term debt | (10.1) |  |  | (0.8) |  |  | (10.9) |
Preliminary fair value of liabilities assumed | (1,955.6) |  |  | (77.4) |  |  | (2,033.0) |
Net consideration transferred | 5,151.7 |  |  | (10.5) |  |  | 5,141.2 |
Cash acquired | 267.0 |  |  | — |  |  | 267.0 |
Total consideration transferred | $ | 5,418.7 |  |  | $ | (10.5) |  |  | $ | 5,408.2 |
(1) Represents valuation adjustments to operating leases and property and equipment during the measurement period.
(2) Represents the income tax effect for the preliminary purchase price allocation adjustments.
The fair values of assets acquired and liabilities assumed are preliminary and are based on the information that was available to management at the time the unaudited condensed consolidated financial statements were prepared. The Company will finalize the valuation and complete the purchase price allocation as soon as practical, but no later than the measurement period of one year from the Mattress Firm Acquisition date. The most significant open items include the estimation of certain long-lived assets and the accounting for income taxes as management is awaiting additional information to complete its assessment of these matters. Measurement period adjustments will be recorded in the period in which they are determined, as if they had been completed at the acquisition date. The finalization of the Company’s purchase accounting assessment could result in changes in the valuation of assets acquired and liabilities assumed, which could be material. The indefinite-lived intangible asset represents the Mattress Firm trade name. The Company applied the income approach through a relief from royalty method to fair value the trade name asset using Level 3 inputs. The indefinite-lived intangible asset is not deductible for income tax purposes. Goodwill is calculated as the excess of the purchase price over the net assets acquired and primarily represents the future economic benefits expected from the expansion of consumer touchpoints, the assembled workforce acquired and operating efficiencies. The goodwill is not deductible for income tax purposes and is included within the Mattress Firm business segment. Transaction Costs The Company incurred an immaterial amount of transaction costs related to the Mattress Firm Acquisition during the three months ended June 30, 2025, and $7.3 million in the three months ended June 30, 2024. The Company incurred $50.2 million of transaction costs related to the Mattress Firm Acquisition during the six months ended June 30, 2025 compared to $22.1 million in the six months ended June 30, 2024. Transaction costs primarily included legal and professional fees associated with the Mattress Firm Acquisition. Consolidated Results of Operations The business acquired in the Mattress Firm Acquisition contributed revenue of $948.8 million and $1,542.5 million for the three and six months ended June 30, 2025, respectively and contributed net income of $52.3 million and $53.1 million for the three and six months ended June 30, 2025, respectively. Unaudited Pro Forma Financial Information The following represents the unaudited consolidated pro forma financial information for the periods as if Mattress Firm had been included in the consolidated results of the Company since January 1, 2024. Pro forma results do not include the effect of any future synergies anticipated to be achieved from the acquisition, and accordingly, are not necessarily indicative of the results that would have occurred if the acquisition had occurred on the date indicated or that may result in the future.
| (unaudited) |  | (unaudited)
| Three Months Ended June 30, |  | Six Months Ended June 30,
(in millions) | 2025 |  | 2024 |  | 2025 |  | 2024
Pro forma net sales | $ | 1,880.8 |  |  | $ | 1,994.4 |  |  | $ | 3,752.6 |  |  | $ | 3,919.6 |
Pro forma net income (loss) | $ | 99.0 |  |  | $ | 117.3 |  |  | $ | (129.8) |  |  | $ | 83.6 |
The pro forma amounts have been calculated after applying the Company’s accounting policies and by including the results of Mattress Firm, and adjusting the combined results to give effect to the following, as if the acquisition had been consummated on January 1, 2024, together with the consequential tax effects thereon:
| (unaudited) |  |  | Three months ended |  | Six months ended
| (in millions) |  |  | June 30, 2024 |  | June 30, 2025 |  | June 30, 2024
Pro Forma Adjustments to Net Sales, as Reported: |  |  |  |  |  |  |
Mattress Firm pre-acquisition net revenue |  |  | $ | 981.7 |  |  | $ | 345.1 |  |  | $ | 1,929.3 |
Elimination of intercompany sales to Mattress Firm |  |  | (220.9) |  |  | (78.0) |  |  | (432.7) |
Total adjustments to net sales |  |  | $ | 760.8 |  |  | $ | 267.1 |  |  | $ | 1,496.6 |
Pro Forma Adjustments to Net Income (Loss), as Reported: |  |  |  |  |  |  |
Mattress Firm pre-acquisition earnings (loss) (1) |  |  | $ | 32.2 |  |  | $ | (318.3) |  |  | $ | 51.3 |
Transaction costs (2) |  |  | — |  |  | 50.2 |  |  | (50.2) |
Intercompany profit elimination (3) |  |  | (11.3) |  |  | 78.5 |  |  | (73.3) |
Purchase price allocation adjustments (4) |  |  | 0.9 |  |  | 16.7 |  |  | (19.2) |
Interest expense adjustments (5) |  |  | (17.6) |  |  | (2.4) |  |  | (34.8) |
Tax effect of pro forma adjustments (6) |  |  | 7.0 |  |  | (20.4) |  |  | 27.4 |
Total adjustments to net income (loss) |  |  | $ | 11.2 |  |  | $ | (195.7) |  |  | $ | (98.8) |
(1) | For the six months ended June 30, 2025, Mattress Firm pre-acquisition loss included a one-time charge of $340.5 million related to stock-based compensation expense recognized when the Mattress Firm Acquisition became probable.
(2) | Represents $50.2 million of transaction costs for professional fees incurred by the Company in connection with the Mattress Firm Acquisition, which were reclassified to the prior year presented in accordance with ASC 805.
(3) | Represents the intercompany profit elimination, which was reclassified to the prior year presented in accordance with ASC 805.
(4) | Represents purchase price allocation adjustments, primarily related to the fair value adjustment of Mattress Firm’s finished goods, which were reclassified to the prior year presented in accordance with ASC 805.
(5) | Represents the net effect of interest expense on borrowings associated with the Mattress Firm Acquisition.
(6) | Represents the income tax benefit (provision) for the above pro forma adjustments, which applies an estimated blended statutory income tax rate of 25.0%.

X
- References No definition available. + Details
Name: | us-gaap_BusinessCombinationAndAssetAcquisitionAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for business combinations, including leverage buyout transactions (as applicable), and divestitures. This may include a description of a business combination or divestiture (or series of individually immaterial business combinations or divestitures) completed during the period, including background, timing, and assets and liabilities recognized and reclassified or sold. This element does not include fixed asset sales and plant closings. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 205 -SubTopic 20 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/205-20/tableOfContent Reference 2: http://www.xbrl.org/2009/role/commonPracticeRef -Topic 805 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/805/tableOfContent + Details
Name: | us-gaap_MergersAcquisitionsAndDispositionsDisclosuresTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration