FTC Will Sue to Block Tempur Sealy’s Mattress Firm Buy

The US Federal Trade Commission will sue to block Tempur Sealy International Inc.’s $4 billion proposed deal with Mattress Firm Inc.

Bloomberg
Updated2 Jul 2024, 11:13 PM IST
FTC Will Sue to Block Tempur Sealy’s Mattress Firm Buy
FTC Will Sue to Block Tempur Sealy’s Mattress Firm Buy

(Bloomberg) -- The US Federal Trade Commission will sue to block Tempur Sealy International Inc.’s $4 billion proposed deal with Mattress Firm Inc.

The agency on Tuesday announced that it had unanimously voted to bring a lawsuit to stop the merger, which it said would give the combined company “the ability and incentive to suppress competition and raise prices for mattresses for millions of consumers.” 

“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, in a statement posted on the agency’s website. 

The FTC will ask a Texas court to put the merger on hold while it conducts a trial in its in-house court. Tempur Sealy denied the agency’s claims and said it has been open to making certain changes to address the FTC’s concerns such as divesting stores. 

“We are confident in the procompetitive rationale for this transaction and look forward to presenting the many benefits of the combination,” according to a statement issued by the company.  

The deal would combine Tempur Sealy – the world’s largest mattress manufacturer with top brands including Tempur-Pedic, Sealy Posturepedic and Stearns & Foster – with the largest US specialty retailer. Mattress Firm, owned by South African retailer Steinhoff International Holdings NV, operates more than 2,300 stores across 49 states.

The lawsuit would mark a rare challenge by the antitrust agency of a so-called vertical merger – deals between companies that aren’t direct competitors but operate in the same supply chain.

Antitrust enforcers have become increasingly concerned about vertical deals, but have struggled to block them in court. The Justice Department failed in bids to block AT&T Inc.’s acquisition of Time Warner Inc. and UnitedHealth Group Inc.’s purchase of Change Healthcare Inc., while the FTC lost a trial last year over Microsoft Corp.’s buy of Activision Blizzard Inc.

In December, however, a key US appeals court ruled in favor of the FTC in a challenge to Illumina Inc.’s acquisition of cancer detection startup Grail Inc.

PoliticoPro earlier reported the FTC’s intention to sue to block the mattress deal. 

(Updates with statement from Tempur Sealy.)

More stories like this are available on bloomberg.com

©2024 Bloomberg L.P.

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First Published:2 Jul 2024, 11:13 PM IST
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