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Written by Judy Godoy
The U.S. Federal Trade Commission said Tuesday it will sue to block a $4 billion merger between mattress maker Tempur Sealy (NYSE:) International Inc. and retailer Mattress Firm. Tempur Sealy announced the cash-and-stock deal in May 2023, seeking to add more than 2,300 traditional Mattress Firm stores. The combined company will have about 3,000 stores globally.
The U.S. Federal Trade Commission voted 5-0 to block the deal, expressing concern about the impact on competition with rivals including Serta Simons Bedding Inc. and Purple Innovation Inc. (NASDAQ:PY) that could lead to higher prices for consumers and potential job losses for manufacturing workers.
“This deal is not intended to create efficiency; it is intended to cripple competition,” said Henry Liu, head of the Federal Trade Commission’s Bureau of Competition.
Tempur-Sealy said in a statement that it was disappointed with the regulator’s decision and that the stores it would acquire represented a small fraction of its U.S. retail bedding locations.
The mattress maker also said it had reached out to unions representing its employees and none opposed the deal.
The vast majority of mattresses purchased in the United States are made domestically, with sales of about $7.8 billion last year, compared with about $809 million in imports, according to statistics compiled by the International Sleep Products Association.
Tempur-Sealy had expected the deal to close this year. It now expects the lawsuit to be resolved in the coming months and close late this year or early 2025.
To address potential regulatory concerns, Tempur Sealy said it may phase out some stores, and in May said it had signed agreements with six other mattress manufacturers so that Mattress Firm stores would continue to carry its brands.
Tempur-Sealy CEO Scott Thompson said last year that the merger agreement includes a $50 million termination fee for FTC cases and a store sales cap.
