The Federal Trade Commission (FTC) announced Tuesday that it will file a lawsuit to block the proposed $4 billion merger between mattress manufacturer Tempur Sealy and retailer Mattress Firm that was announced more than a year ago.
The proposed deal would see Tempur Sealy acquire Mattress Firm and its more than 2,300 stores in a cash-and-stock deal that was first announced in May 2023. If the deal were to move forward, the company would have about 3,000 stores around the world. The merger was expected to be completed in the second half of 2024.
FTC commissioners voted 5-0 to block the deal after voicing concern about the effects on competition with rivals Serta Simmons Bedding and Purple Innovation. The agency alleges that Tempur Sealy's vertical acquisition of Mattress Firm would allow the combined firm to cut off competitors' access to the market, raising mattress prices while lowering product quality and consumer choice.
"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," FTC Bureau of Competition Director Henry Liu said in a statement.
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"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," Liu added.
"Mattress Firm is disappointed with the decision of the FTC and continues to believe that the transaction with Tempur Sealy will be beneficial to consumers and employees as well as the overall bedding and furniture industry," Mattress Firm said in a statement to FOX Business.
"We recognize our business success is due to the variety of industry-leading bedding products we offer consumers in our stores and online, and our ability to maintain strong relationships with our suppliers," it added.
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"We will continue to offer the curated, comprehensive, and diverse assortment that is a core element of our business, featuring both Tempur Sealy and non-Tempur Sealy branded products," Mattress Firm added, noting that Tempur Sealy has worked with some of its suppliers on post-merger supply agreements.
Tempur Sealy said in a statement that it "has been working constructively with the FTC to secure regulatory approval for this transaction and is disappointed that the FTC has initiated litigation. 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."
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The company added that the bedding industry is "highly competitive" with consumers able to choose from "a diverse selection of products, brands, price points, and purchasing channels." It added that Mattress Firm only operates a "small fraction" of brick-and-mortar retailers and that online sales channels "sell millions of bedding products" every year.
Tempur Sealy added that it continues to believe that the merger with Mattress Firm "will unlock incremental benefits for all stakeholders, particularly consumers."
Reuters contributed to this report.
