Tempur Sealy to Sell Sleep Outfitters, Mattress Firm Stores Amid FTC Takeover Challenge — Update

By Dean Seal

Tempur Sealy International said it would sell dozens of Mattress Firm locations and the Sleep Outfitters retail chain as it works through a regulatory challenge to its planned $4 billion acquisition of Mattress Firm.

The world's largest mattress supplier and manufacturer Monday said it entered into a purchase agreement with Mattress Warehouse that calls for the sale of 73 Mattress Firm retail locations and all 103 specialty mattress retail locations, as well as seven distribution centers tied to the Sleep Outfitters subsidiary.

The transaction would still leave Temper Sealy with over 2,800 retail locations worldwide following completion of the deal.

Chief Executive Scott Thompson said the divestiture plan was conditioned on the closing of Tempur Sealy's Mattress Firm acquisition and was drawn up as part of the company's engagement with the Federal Trade Commission.

Tempur Sealy agreed to buy Mattress Firm in May 2023 for $2.7 billion in cash and about $1.3 billion in stock, after roughly two years of talks between the two sides. The deal, originally set to close in the second half of this year, was expected to boost Tempur Sealy's sales amid tepid home-improvement spending and inflated costs in the bedding industry.

The FTC voted to block the deal in July, saying a vertical acquisition of Mattress Firm would allow Tempur Sealy to suppress competition and raise mattress prices for millions of customers.

"Through emails, presentations, and other deal documents, Tempur Sealy has made it abundantly clear that its acquisition of Mattress Firm is intended to kneecap competitors and dominate the market," Henry Liu, director of the FTC's Bureau of Competition, said in July.

Tempur Sealy maintains that Mattress Firm holds a small fraction of U.S. brick-and-mortar bedding stores.

The next round of hearings in the litigation process is scheduled to begin on Nov. 12. Tempur Sealy said Monday it still believes the process can be successfully completed in the coming months and that the transaction can close in late 2024 or early next year.

Write to Dean Seal at dean.seal@wsj.com

(END) Dow Jones Newswires

September 23, 2024 08:36 ET (12:36 GMT)

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