Tempur Sealy confident in $4 billion Mattress Firm deal despite FTC opposition

LEXINGTON, Ky. – In response to the Federal Trade Commission’s 5-0 decision and subsequent legal filing to block its proposed $4 billion acquisition of Mattress Firm last week, Tempur Sealy International voiced its confidence in the deal this morning during a brief conference call.

Scott Thompson, chairman, president and chief executive officer of the mattress manufacturer, said given the FTC’s court challenge the deal will now likely close by late 2024 or early 2025. Thompson said the company has been working “constructively with the FTC to secure regulatory approval for this transaction for over a year.” The tenor of the call followed along with the company’s statement last week outlining its stand on the FTC decision.

He said that the company complied with the FTC’s second request for information on Nov. 23. “We have voluntarily granted the FTC six extensions of time to complete the review,” he said.

Thompson acknowledged the commission’s role in the process and its work to understand the mattress industry and the acquisition.

“While we spent more time in FTC staff review than we planned, we felt it was appropriate given their important job,” Thompson said. “We are disappointed by the FTC’s position, but have always believed this transaction is consistent with the law, and in the current regulatory environment, we were prepared for this step.”

Thompson seemed to push back on the FTC’s argument in its filing last week with the U.S. Court in the Southern District of Texas that characterized the bedding industry as being narrowly focused with the bulk of the premium-priced beds being sold through Mattress Firm. The acquisition, the commission argued, would limit other mattress sellers’ ability to sell product in that price bracket.

“The bedding industry is highly competitive, offering consumers a diverse selection of products, brands, price points and purchasing channels,” Thompson said. “Brick and mortar retailers and direct-to-consumer bedding brands sell millions of bedding products online each year. In fact, we believe e-commerce, which includes mattresses at all price points, is the fastest-growing channel in our industry. Our own websites provide a clear proof point of the ability to sell high-end bedding online.”

He went on in his statement that “there are thousands of brick-and-mortar stores across the United States where consumers can purchase bedding products only a small fraction of which are operated by Mattress Firm.”

“A quick Google search or even driving down the street presents numerous bedding distribution options,” he said. “We remain confident that our combination will unlock incremental benefits for all stakeholders.”

Addressing one of the most discussed topics in the industry – whether Mattress Firm stores could become dedicated Tempur Sealy-branded stores – Thompson pointed to the company’s previous statements that the strategy was to continue to operate the more than 2,300 stores as multi-branded stores.

In its legal filing, the FTC posed that Mattress Firm, under Tempur Sealy’s ownership, could become stores that gave Tempurpedic, Stearns & Foster and Sealy brands prime slots on the floor and additional incentives for sales associates to favor those brands over others.

Mattress Firm has been “a valued retail partner for more than 35 years and we know one of their many strengths is their diverse offering, which includes leading brands and complementary private label product, providing a broad range of innovation to consumers,” Thompson said. “We are committed to maintaining this curated, comprehensive and diversified product assortment that is core to their business success and inherent in the intrinsic value of Mattress Firm.”

During the call, Thompson reiterated comments from previous earnings calls that outlined the company’s success in signing “post-merger supply agreements” with other mattress brands for Mattress Firm’s merchandising strategy. He said one of the agreements was with a supplier not currently selling Mattress Firm.

“We are confident in our pro-competitive rationale of this transaction and look forward to presenting the many benefits of the combination,” he said. “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.”

See also:

  • The FTC has sued to block the Tempur Sealy, Mattress Firm deal. What’s next?
  • Mattress Firm disappointed in FTC move to block Tempur Sealy deal

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