I don’t think the recent acquisition of Elite Comfort Solutions (ECS) by Leggett and Platt was your typical 3-pointer from outside the arc or even a walk-off Home Run in the bottom of the 9th. For me it feels a little more like a bicycle kick to the back corner of the net for the win. Why? (As you read on you should know that I was a Leggett and Platt employee for 9 years so there is probably some bias in my opinion here but that doesn’t make me wrong-it makes me informed. )

1. Leggett and Platt is one of the largest companies in our industry and is THE largest supplier if I’m not mistaken. We are seeing major growth in the e-commerce space and in beds made with foam cores so unless Leggett made a move, that part of the market was going to pass them by.
2. L&P did the foam thing years ago and sold the business, so why are they getting back in? Because they won’t be selling commodities which bring commodity prices and commodity margins. They bought a company that has a significant amount of intellectual property that allows them to develop new and innovative products for their key customers that will be exclusive to them. Think about the spring and machinery side of what they do, it’s the same model. Not saying that they won’t sell the ham and egg products, but they have the ability to go upmarket with premium goods where they can make some money. That’s a big deal.
3. I don’t know anything about the ECS guys but after listening to the L&P investor call on this acquisition, it’s clear that the management teams line up. Karl Glassman, the current CEO of Leggett and Platt and Perry Davis, their President of the Residental Segment, made it clear that there was a lot of respect for the team at ECS and did a great job of welcoming them to the L&P family. If you’ve been reading this blog for long you know how I feel about culture. If you merge two large companies together that don’t fit, it could destroy a lot of shareholder value. Never underestimate the importance of shared purpose and vision.
4. How valuable is Leggett and Platt to their customers now? They have become a one-stop shop for bedding solutions. Think about it; they can offer foam, innerspring, hybrids, foam toppers, coil toppers, foam edges, coiled edges, box spring components, box springs in a box, adjustable bases, bed frames, beds that come in a box, adjustable bases that come in a box and the list goes on. I’ve been in many meetings at Leggett where we would bring in a customer to show them one thing but before that group left, you better believe we trotted out five other products for them to look at. I can’t tell you how many times we heard people say, “I didn’t know you made that!” I think those show and tell meetings just got longer.

Leggett is really good at buying companies and letting them run their business but I hope for their sake they don’t do that here. Sure, let the management team do their thing but if they’re smart they won’t leave it where it is, they will integrate it with the innerspring core/micro coil side of things and really figure out how to mash it together to make sure that in this case, 1+1=2 because it really should.

On a side note, CONGRATULATIONS to Mitch Dolloff the newly named Chief Operating Officer at Leggett and Platt. Mitch is a class guy, a strategic thinker, and one of the hardest working people at the company. Best of luck to Mitch, but I know he will be WAY better than the last guy they had in that spot. Sorry Karl, I couldn’t help myself. YOU STILL DA MAN!!!!