Tempur Sealy Adopts Poison Pill
The adoption of the Rights Plan is intended to protect Tempur Sealy and its stockholders from the actions of third parties that the Board of Directors determines are not in the best interests of Tempur Sealy and its stockholders, and to enable all stockholders to realize the long-term value of their investment in Tempur Sealy. The Board of Directors believes that the Rights Plan will ensure that the Board of Directors remains in the best position to discharge its fiduciary duties to Tempur Sealy and its stockholders. The Rights Plan is not intended to interfere with any sale, merger, tender or exchange offer or other business combination approved by the Board of Directors. Nor does the Rights Plan prevent the Tempur Sealy Board of Directors from considering any offer that it considers to be in the best interest of Tempur Sealy’s stockholders.
The Rights Plan is similar to other plans adopted by publicly-held companies. Under the Rights Plan, the rights generally would become exercisable only if a person or group (including a group of persons who are acting in concert with each other) acquires beneficial ownership of 20% or more of Tempur Sealy’s common stock in a transaction not approved by Tempur Sealy’s Board of Directors. In that situation, each holder of a right (other than the acquiring person or group, whose rights will become void and will not be exercisable) will have the right to purchase, upon payment of the exercise price and in accordance with the terms of the Rights Plan, a number of shares of Tempur Sealy common stock having a market value of twice such price. In addition, if Tempur Sealy is acquired in a merger or other business combination after an acquiring person acquires 20% or more of Tempur Sealy’s common stock, each holder of the right would thereafter have the right to purchase, upon payment of the exercise price and in accordance with the terms of the Rights Plan, a number of shares of common stock of the acquiring person having a market value of twice such price. The acquiring person or group would not be entitled to exercise these Rights. In the Rights Plan, the definition of “beneficial ownership” includes derivative securities.
The Rights Plan is a limited duration rights plan and, accordingly, the Rights Plan expires, without any further action being required to be taken by Tempur Sealy’s Board of Directors, on February 7, 2018.
Further details of the Rights Plan will be contained in a Current Report on Form 8-K and in a Registration Statement on Form 8-A that Tempur Sealy will be filing with the Securities and Exchange Commission (SEC). These filings will be available on the SEC’s web site at www.sec.gov. Copies are also available at no charge at the Investor Relations section of Tempur Sealy’s corporate website at www.tempursealy.com.