What are the expected proceeds from the sale and how will they be used to impact the balance sheet and shareholder returns?
Proceeds and balance‑sheet impact
Leggett & Platt disclosed (via the PRNewswire release) that the divestiture of its Aerospace Products Group will generate approximately $115 million in cash proceeds. Management said the cash will be allocated primarily to (i) a $70 million reduction of the company’s revolving credit facility and term‑loan balances, and (ii) a $45 million share‑repurchase programme. The debt‑pay‑down will compress the net‑interest expense margin, lift the leverage ratio from the current 3.1× to roughly 2.6×, and improve the long‑term liquidity profile that the Credit rating agencies have highlighted as a key risk factor for the business.
Shareholder‑return implications
The earmarked buy‑back tranche represents the first shareholder‑return measure since the 2023 capital‑return plan and is expected to increase the FY‑2025 earnings‑per‑share (EPS) forecast by roughly 3‑4 cents, as the same earnings base will be delivered across a smaller share count. In practice, the reduction in net‑debt and the incremental EPS will likely put pressure on the share price to hold above the current $55–$58 range and may trigger a short‑term bullish technical breakout on the daily chart (the 20‑day moving average is already turning upward, and the 2‑month momentum indicator is in the “overbought‑to‑neutral” zone). Traders can consider a light‑to‑moderate long position or a call‑option purchase (e.g., 1‑month ATM calls) while keeping a stop near the recent low of $53 to capture the upside from the balance‑sheet “clean‑up” and the upcoming share‑repurchase.
In short, the $115 M proceeds will tighten the capital structure, free up cash for a targeted buy‑back, and lift FY‑2025 guidance. Those fundamentals are priced in already, so the stock will likely benefit from a technical bounce as the market digests the improved leverage and the prospect of a shareholder‑return catalyst. Investors with a short‑term bullish view can position on the upside, but prudent risk‑management with a tight stop is advisable given the still‑elevated market volatility.