American mattress manufacturer Tempur Sealy’s proposed $4 billion acquisition of Mattress Firm Group Inc. is being put on hold amid a challenge by the Federal Trade Commission (FTC), the federal agency announced on July 2.
The FTC claims that documents show the acquisition is a deliberate attempt to cripple competition by limiting its rivals’ access to Mattress Firm’s nationwide network of stores.
“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 a statement.
“This deal isn’t about creating efficiencies; it’s about crippling the competition, which would raise prices on an essential good and could lead to layoffs for good-paying American manufacturing jobs in nearly a dozen states.”
The two companies said the agreement would result in a combined global footprint of approximately 3,000 retail stores, 30 e-commerce platforms, 71 manufacturing facilities, and four state-of-the-art R&D facilities worldwide.
Both firms expect the deal to close in the second half of 2024.
“We appreciate their efforts to understand the industry and the proposed transaction, but ultimately believe the FTC’s perspective does not reflect all the relevant facts and law,” the company said.
The mattress maker noted that the bedding industry is “highly competitive,” with thousands of brick-and-mortar storefronts across the United States, of which “only a small fraction” are operated by Mattress Firm.
The FTC argues the proposed acquisition will merge Tempur Sealy’s manufacturing and supply operations with Mattress Firm’s vast retail footprint, thus granting the combined company “enormous power at multiple parts of the mattress supply chain.”
The FTC claims that multiple documents show Tempur Sealy plans to limit its rivals’ access to Mattress Firm’s nationwide network of stores to harm competition in the premium mattress market.
Those competition mattress suppliers—the majority of which are American manufacturers employing thousands of workers—will likely lose access to the “single most important retail channel, significantly impairing their ability [to] compete and potentially leading competing suppliers to reduce output, close factories, and lay off workers,” the FTC said.
The FTC further claimed the deal would result in higher prices for customers, a large percentage of whom the agency said rely on financing to afford premium mattresses.
Tempur Sealy said it remains hopeful that a successful litigation process will conclude within the coming months, allowing it to close the deal in late 2024 or early 2025.
“We continue to believe the combination of Tempur Sealy and Mattress Firm will unlock incremental benefits for all stakeholders, particularly consumers,” the firm said.
