"Furniture giant Tempur Sealy plans to sell off approximately 175 stores due to an ongoing investigation by the Federal Trade Commission (FTC)"
In a significant move for the mattress industry, Tempur Sealy International has successfully completed its acquisition of Mattress Firm, despite a challenge from the Federal Trade Commission (FTC). The deal, worth $4 billion, was approved by the U.S. District Court for the Southern District of Texas in January 2025, effectively allowing the merger to proceed.
The proposed senior secured term loan, amounting to an aggregate principal of up to $1.6 billion, will mature in seven years. If the deals close, Tempur Sealy expects to run more than 2,800 stores globally.
Tempur Sealy anticipates that half of its North American sales will come from Mattress Firm, as stated in its Monday filing. However, the company has agreed to sell its Sleep Outfitters subsidiary and a portion of Mattress Firm's footprint. MW SO Holdings Company, also known as Mattress Warehouse, will acquire 73 Mattress Firm locations and Sleep Outfitters' 103 specialty mattress retail locations.
The FTC's antitrust challenge, which aimed to block the vertical merger, was based on concerns that the merger would suppress competition and raise prices for mattresses. However, it's not clear how much the deal with Mattress Warehouse will alter the FTC's argument. The FTC declined to comment on the matter.
Mattress Firm, the largest mattress specialty retailer in the U.S., currently operates approximately 2,300 brick-and-mortar stores. Despite its substantial footprint, the company denies that its retail footprint "dwarfs" that of all other mattress specialty retailers and furniture stores. Mattress Warehouse, with more than 320 stores, is the second-largest retailer in the mattress space.
The acquisition also includes seven distribution centers. The hearings on the FTC's challenge are scheduled to begin on November 12 and are expected to last two weeks. Tempur Sealy CEO Scott Thompson stated that this move is part of the company's effort to move its acquisition of Mattress Firm forward.
It's important to note that the FTC did not secure any divestitures specifically related to this merger. The court decision suggests that the FTC's challenge did not lead to a negotiated remedy or structural divestiture that would alter the outcome. Instead, Tempur Sealy was cleared to close the acquisition, and the FTC’s attempt to block it failed as of the early 2025 ruling.
The hearings are scheduled to wrap up "in the coming months," which would allow the deal to close in late 2024 or early 2025. As the industry awaits the final outcome, the impact of this merger on the mattress market remains to be seen.
[1] "U.S. District Court Denies FTC's Motion to Block Tempur Sealy's $4 Billion Acquisition of Mattress Firm" - CNBC, January 31, 2025. [4] "FTC Fails to Block Tempur Sealy's Acquisition of Mattress Firm" - The Wall Street Journal, January 31, 2025.
The acquisition of Mattress Firm by Tempur Sealy International could potentially expand their global business infrastructure with up to 2,800 stores. This move may also transform their North American sales significantly, as half of it is predicted to originate from Mattress Firm.
The FTC's antitrust challenge, aiming to halt the vertical merger, was built on concerns about suppressed competition and increased mattress prices. However, the FTC's argument could possibly alter with the deal between Tempur Sealy and Mattress Warehouse, as they failed to secure divestitures specifically related to this merger.
The acquisition also includes strategic distribution centers, which may influence the logistics and delivery of their products in the space industry, particularly in the mattress market. The hearings are scheduled to complete in the coming months, and the outcome could have substantial implications for the industry finance and business landscape.
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