The Federal Trade Commission has voted unanimously to block Lexington-based Tempur Sealy International Inc.’s proposed $4 billion acquisition of Mattress Firm Group Inc.
The proposed vertical acquisition would merge Tempur Sealy’s manufacturing and supply operations with Mattress Firm’s vast retail footprint, giving the combined company enormous power at multiple parts of the mattress supply chain. The Commission issued an administrative complaint and authorized a lawsuit in federal court to block the acquisition, alleging that Tempur Sealy—the world’s largest mattress supplier and manufacturer—will have the ability and incentive to suppress competition and raise prices for mattresses for millions of consumers once it acquires Mattress Firm.
The Commission issues an administrative complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The issuance of the administrative complaint marks the beginning of a proceeding in which the allegations will be tried in a formal hearing before an administrative law judge.
“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,” said Henry Liu, director of the FTC’s Bureau of Competition. “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.”
Mattress Firm is the nation’s largest mattress retailer and is considered one of the most important retail channels for mattresses. By acquiring Mattress Firm, Tempur Sealy would wield significant power over its rival mattress suppliers—which include Serta Simmons Bedding and Purple Innovation Inc.—and could cut or limit their access to Mattress Firm’s stores, the FTC alleges in the complaint.
In a statement issued by the FTC, the Commission said 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.
In response, Tempur Sealy issued the following statement:
“We continue to believe the combination of Tempur Sealy and Mattress Firm will unlock incremental benefits for all stakeholders, particularly consumers. Mattress Firm’s strong retail presence complements Tempur Sealy’s manufacturing capabilities, facilitating more targeted innovation, improving the customer experience, and broadening our U.S. omni-channel platform. Additionally, we expect to achieve synergies by leveraging our global scale and vertically integrated infrastructure to drive efficiencies through logistics, product lifecycle management, manufacturing optimization and sourcing initiatives. All of these factors will allow us to further execute on Tempur Sealy’s mission to improve people’s lives through better sleep.
“We manufacture 100% of the mattresses we sell domestically in the United States, supporting the domestic workforce with thousands of jobs. We have discussed the transaction with the labor unions representing our employees and none have expressed opposition to the transaction. In fact, most of the unions have submitted letters of support, believing that the transaction will benefit their members and not adversely impact workers of other bedding companies that they represent.
“We are confident in the procompetitive rationale for this transaction and look forward to presenting the many benefits of the combination. We believe that a successful litigation process can be completed in the coming months, which would allow us to close the transaction in late 2024 or early 2025.”
