FTC Blocks $4 Billion Merger of Mattress Giants Tempur Sealy and Mattress Firm

In a unanimous decision, the Federal Trade Commission (FTC) has moved to block the $4 billion merger between mattress maker Tempur Sealy and Mattress Firm, the largest bedding retailer in the United States. This decision, announced on Tuesday, marks a significant intervention by the FTC aimed at preserving competition within the mattress industry.

In May 2023, Tempur Sealy, recognized globally as the largest mattress supplier and manufacturer, announced its intent to acquire Mattress Firm. This merger would have created a powerhouse in the mattress market with a combined network of 3,000 stores and 71 manufacturing facilities, poised to dominate the market significantly. The deal was projected to close in the second half of 2024, pending regulatory approval.

Henry Liu, director of the FTC’s Bureau of Competition, emphasized that the acquisition was not about creating efficiencies but rather about eliminating competition. He warned that such a consolidation could lead to increased prices for consumers and potential layoffs for well-paying manufacturing jobs across nearly a dozen states.

This merger was seen by some analysts as a strategic move in a slowing market for mattress and furniture sales, which had boomed during the pandemic as consumers invested in home furnishings. However, Mattress Firm has faced its own financial challenges, including a 2018 bankruptcy due to over-expansion and increased competition from online retailers like Casper and Amazon.

The FTC’s decision to block the merger was based on concerns that the deal would significantly suppress competition and lead to higher prices for consumers. The Commission highlighted that the merger would give Tempur Sealy and Mattress Firm substantial control over the mattress supply chain, potentially harming competing suppliers who rely on Mattress Firm as a crucial retail channel. This loss of competition could negatively impact thousands of American workers employed by these suppliers.

The FTC argued that the reduced competition would be detrimental to a significant segment of mattress buyers, particularly working-class older adults who often rely on financing. The potential monopolistic control could drive rivals such as Serta Simmons Bedding and Purple Innovation out of business by limiting their access to retail space and steering customers toward Tempur Sealy products through higher sales associate commissions.

Tempur Sealy and Mattress Firm expressed their disappointment in the FTC’s decision. Tempur Sealy maintained that the bedding industry remains highly competitive and anticipated that the litigation process would conclude in a few months, allowing the transaction to close by late 2024 or early 2025. Both companies asserted that the merger would ultimately benefit consumers, employees, and the overall bedding and furniture industry.