Tempur Sealy Sought Mattress Deal to ‘Block New Competition’

(Bloomberg) -- Tempur Sealy International Inc. wanted to buy Mattress Firm Inc. to eliminate its biggest rival, according to newly unsealed documents in the government lawsuit seeking to block the deal.

Tempur Sealy’s top executive wrote comments on the cover of a May 2022 presentation about the deal saying that buying Mattress Firm would “eliminate future competition” and “block new competition,” according to the documents, which were unsealed by a Texas judge late Thursday. 

The US Federal Trade Commission sued in federal court to block the $4 billion acquisition last month. Tempur Sealy is the world’s largest mattress manufacturer with top brands including Tempur-Pedic, Sealy Posturepedic and Stearns & Foster. Mattress Firm, owned by South African retailer Steinhoff International Holdings NV, operates more than 2,300 stores across 49 states.

In the unsealed documents, the agency didn’t name the executive, which it identified as Sealy’s chief executive officer. Scott L. Thompson has served as the company’s chairman and CEO since 2015. In other documents that were also unsealed, executives wrote that they hoped the acquisition of Mattress Firm would let them prevent rivals like Serta Simmons Bedding LLC and Resident Home LLC, which sells the Nectar brand, from being distributed in the stores.

Another presentation to Tempur Sealy’s board said that acquiring Mattress Firm — the largest mattress retailer in the US — would “further build[] a competitive moat” and give Tempur Sealy “[m]aximum control over a critical retail channel partner.”  

The companies didn’t immediately respond to requests for comment. Tempur Sealy said after the FTC filed suit that it would contest the allegations and believes the transaction is consistent with the law.

The FTC declined to comment.

The agency is seeking a preliminary injunction to block the acquisition while a trial takes place in the agency’s in-house court. The Texas court hasn’t yet scheduled a hearing, though both sides have requested the judge hold one in November on the injunction request.

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