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of Federal Trade Commission (FTC) announced Tuesday that it will file a lawsuit to block the proposed $4 billion merger between mattress maker Tempur Sealy and retailer Mattress Firm that was announced more than a year ago.
The proposed agreement will be seen Tempur Sealy buys mattress firm and more than 2,300 of its stores in a cash-and-stock deal that was first announced in May 2023. If the deal went ahead, the company would have about 3,000 stores worldwide. The merger was expected to be completed in the second half of 2024.
FTC commissioners voted 5-0 to block the deal after expressing concern about the effects on competition with rivals Serta Simmons Bedding and Purple Innovation. The agency alleges that Tempur Sealy’s vertical purchase of the mattress firm would allow the combined firm to cut off competitors’ market access, raising mattress prices while reducing product quality and consumer choice.
“Through emails, presentations and other settlement documents, Tempur Sealy has made abundantly clear that its purchase of the mattress firm is intended to crush competitors and dominate the market,” the director of the FTC’s Bureau of Competition said in a statement. Henry Liu.
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The proposed $4 billion merger between Tempur Sealy and Mattress Firm is in jeopardy after the FTC sued to block the tie-up. (Pavlo Gonchar/SOPA Images/LightRocket via Getty Images/Getty Images)
“This deal isn’t about creating efficiencies; it’s about crippling competition, which would raise prices for an essential good and could lead to layoffs for good-paying American manufacturing jobs in nearly a dozen countries,” Liu added.
| TICKER | Safety | The last | AmENdmENT | change % |
|---|---|---|---|---|
| TPX | TEMPUR SEALY INTERNATIONAL INC. | 47,21 | -0.13 | -0.27% |
“The mattress company is disappointed with FTC ruling 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 that the success of our business is due to the variety of industry-leading bedding products we offer to consumers in our stores and online, and our ability to maintain strong relationships with our suppliers,” he added.
FTC MAY TRY TO BLOCK A BUSINESS MERGER AT ALL
The mattress firm says it will continue to sell non-Tempur Sealy mattresses if the merger goes ahead in response to the FTC’s concerns. (Don and Melinda Crawford/UCG/Universal Images Group via Getty Images/Getty Images)
“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 it. suppliers in post-merger supply agreements.
Tempur Sealy said in a statement that it “has been working constructively with the FTC to ensure regulatory approval about 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 facts and the relevant law.”
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The FTC claims that Tempur Sealy’s purchase of the mattress firm would harm competition in the bedding industry. (Andrew Harrer/Bloomberg via Getty Images/Getty Images)
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 purchase channels”. He added that Mattress Firm operates only a “tiny fraction” of brick-and-mortar retailers and that online sales channels “sell millions of bedding products” each year.
Tempur Sealy added that it continues to believe that the merger with the mattress firm “will unlock incremental benefits for all stakeholders, especially consumers.”
Reuters contributed to this report.