FTC votes unanimously to block Tempur Sealy's proposed $4 billion takeover of Mattress Firm

By Ciara Linnane

Deal documents show company wants to 'kneecap competitors and dominate the market,' says FTC official

The Federal Trade Commission has voted unanimously to block Tempur Sealy Inc.'s $4 billion proposed acquisition of Mattress Firm on concerns the deal would stifle competition in the sector.

The agency has issued an administrative complaint and allowed a lawsuit in federal court, alleging that Tempur Sealy (TPX), as the world's biggest supplier and manufacturer of mattresses, "will have the ability and incentive to suppress competition and raise prices for mattresses for millions of consumers once it acquires Mattress Firm."

The company planned to merge its manufacturing and supply operations with Mattress Firm's enormous retail footprint. But that would give the combined company a lot of power at many parts of the mattress supply chain, said the FTC.

"The acquisition would enable Tempur Sealy's mattress brands-which include Stearns & Foster and Tempur-Pedic-to dominate the market over those of its competitors," the FTC added.

Deal documents show that Tempur Sealy plans to limit rivals' access to Mattress Firm's nationwide network of stores to harm competition, the FTC said in a statement.

That would mean competing suppliers, many of which are American and employ thousands of workers, would lose access to the single most important retail channel, which is expected to lead to slower output and eventually to job cuts and factory closures.

"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," said Henry Liu, Director of the FTC's Bureau of Competition.

Tempur Sealy responded, saying it was disappointed by the news and said it had worked "constructively" with the regulator to secure approval for the deal.

"There are thousands of brick-and-mortar storefronts across the United States where consumers can purchase bedding products, only a small fraction of which are operated by Mattress Firm," the company said in a statement. "Additionally, brick-and-mortar retailers and direct-to-consumer bedding brands sell millions of bedding products online each year."

The company is confident in the procompetitive rationale for the deal and expects to close in late 2024 or 2025.

Mattress Firm is the biggest mattress retailer in the U.S., giving it the benefit of consumer insights that can turn brands into significant players. The FTC cited Serta Simmons Bedding and Purple Innovation Inc. (PRPL) as examples of suppliers that would be hurt by the deal.

Tempur Sealy's stock was up 1.9% shortly after 2 p.m. Eastern Tuesday, but is down 5.3% in the year to date, while the S&P 500 SPX has gained 14.9%.

-Ciara Linnane

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07-02-24 1408ET

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