FTC Blocks Tempur Sealy’s $4 Billion Mattress Firm Acquisition

All five Federal Trade Commissioners Vote to Halt Tempur Sealy International‘s planned $4 billion acquisition of Mattress Firmsaying that as the world’s largest mattress supplier and manufacturer, Tempur Sealy’s purchase of the 2,400-store retailer would give it “the ability and incentive to suppress competition and raise prices for mattresses for millions of consumers,” according to an FTC statement.

“Multiple deal documents show that Tempur Sealy plans to limit rivals’ access to Mattress Firm’s nationwide network of stores to harm competition,” the statement said. “Competing mattress suppliers — which are predominantly American manufacturers employing thousands of workers — are likely to 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. ”

Tempur Sealy protested the FTC’s move, which includes a lawsuit to be filed in the U.S. District Court for the Southern District of Texas. “Tempur Sealy has been working constructively with the FTC to secure regulatory approval for this transaction and is disappointed that the FTC has initiated litigation,” according to a company statement, adding that “the bedding industry is highly competitive, consumers have a diverse selection of products, brands, price points and purchasing channels. 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. Additionally, brick-and-mortar retailers and direct-to-consumer bedding brands sell millions of bedding products online each year.”

The FTC, however, expressed deep concerns about this vertical acquisition, which would combine a major manufacturer and a leading retailer. “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. By cutting off or degrading rivals’ access to Mattress Firm as a retail channel, Tempur Sealy’s acquisition could result in higher mattress prices, decreased product quality and choice, or reduced innovation.”

Tempur Sealy first announced the acquisition in May 2023. Mattress Firm, which had been through a bankruptcy and several owners, had planned an IPO but had cancelled it in January 2023, citing market volatility. Until the FTC decision preparations for the purchase were proceeding: mattress manufacturer Purple Innovation resolved its IP disputes with Tempur Sealy and established new partnership parameters in anticipation of the Mattress Firm acquisition in March 2024.