Tempur Sealy’s $4 billion acquisition of Mattress Firm Group Inc. is facing a challenge from the Federal Trade Commission (FTC), which has put the deal on hold. The agency alleges that Tempur Sealy’s acquisition is an attempt to harm competition in the premium mattress market by limiting rivals’ access to Mattress Firm’s nationwide network of stores.
The FTC claims to have evidence, including emails and presentations, which show that Tempur Sealy intends to cripple its competitors and dominate the market. This move could lead to higher prices for consumers and potential job layoffs in the manufacturing industry. Henry Liu, Director of the FTC’s Bureau of Competition, stated that the deal is not about creating efficiencies but rather about crippling the competition.
Tempur Sealy and Mattress Firm had announced that their merger would result in a combined global presence of approximately 3,000 retail stores, 30 e-commerce platforms, 71 manufacturing facilities, and four state-of-the-art R&D facilities. Both companies expected the deal to be finalized in the second half of 2024.
In response to the FTC’s challenge, Tempur Sealy expressed disappointment and stated that it had been working constructively with the antitrust agency to secure regulatory approval for the acquisition. The company believes that the FTC’s perspective does not reflect all the relevant facts and law.
The FTC argues that the acquisition would grant Tempur Sealy significant power in multiple parts of the mattress supply chain by merging its manufacturing and supply operations with Mattress Firm’s vast retail footprint. This would limit rivals’ access to Mattress Firm’s stores and harm competition in the premium mattress market.
The FTC emphasized that many of Tempur Sealy’s competitors are American manufacturers employing thousands of workers. These manufacturers would likely lose access to Mattress Firm’s important retail channel, leading to reduced output, factory closures, and job layoffs. The agency also warned that customers could face higher prices, as many rely on financing to afford premium mattresses.
Tempur Sealy remains hopeful that the litigation process will conclude successfully within the next few months, allowing the deal to close in late 2024 or early 2025. The company believes that the combination of Tempur Sealy and Mattress Firm will bring incremental benefits to all stakeholders, particularly consumers.
In conclusion, the FTC’s challenge to Tempur Sealy’s acquisition of Mattress Firm highlights concerns about potential harm to competition in the premium mattress market. The agency alleges that the deal could lead to higher prices for customers and job losses in the manufacturing industry. Tempur Sealy, on the other hand, maintains that the acquisition will benefit all stakeholders and hopes for a successful resolution in the coming months.
