FTC Unanimously Moves to Block $4 Billion Merger of Mattress Giants

The Federal Trade Commission (FTC) has unanimously voted to block the proposed $4 billion merger between mattress industry giants Tempur Sealy and Mattress Firm. The decision aims to prevent what the Commission sees as a threat to competition and consumer prices.

Tempur Sealy, the largest mattress supplier globally, agreed in May 2023 to acquire Mattress Firm, the leading bedding retailer in the United States. The FTC authorized a lawsuit in federal court to halt the acquisition, citing concerns that the deal would stifle competition, elevate prices, and consolidate excessive power within the mattress supply chain.

“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.”

The proposed merger would have resulted in a combined entity with 3,000 stores and 71 manufacturing facilities, significantly altering the competitive landscape of the mattress industry. Tempur Sealy’s portfolio includes prominent brands such as Tempur-Pedic, Sealy, and Stearns & Foster.

The merger was initially perceived as advantageous for both companies. The mattress and furniture sales sector has seen a decline post-pandemic, following a surge in consumer spending on home furnishings. Mattress Firm has also faced financial challenges, including a bankruptcy filing in 2018 due to over-expansion and competition from online retailers like Casper and Amazon.

However, the FTC argues that the merger would harm consumers, particularly “working-class, older adults” who often rely on financing to purchase premium mattresses. The Commission warns that reduced competition could drive other rivals, such as Serta Simmons Bedding and Purple Innovation, out of business.

“For example, the combined firm could limit present and future rivals’ access to Mattress Firm’s floor space, award sales associates higher commissions on Tempur Sealy products sold, or otherwise take steps designed to steer customers away from competitors’ products and toward Tempur Sealy’s mattresses,” the FTC stated.

In response, Tempur Sealy asserted that the bedding industry remains “highly competitive” and that Mattress Firm represents only a small fraction of brick-and-mortar storefronts. The company expressed disappointment over the FTC’s litigation and remains optimistic about completing the transaction by late 2024 or early 2025.

“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. 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,” Tempur Sealy said in a statement.

Mattress Firm echoed this sentiment, stating its belief that the merger would benefit consumers, employees, and the broader bedding and furniture industry.