Tempur Sealy International Issues Statement on U.S. Federal Trade Commission Challenge of Proposed Acquisition of Mattress Firm

Rhea-AI Summary

Tempur Sealy International (NYSE: TPX) announced that the U.S. Federal Trade Commission (FTC) will challenge its proposed acquisition of Mattress Firm Group Inc. Tempur Sealy expressed disappointment but remains committed to the transaction, citing the competitive nature of the bedding industry and the consumer benefits the merger would bring.

The company highlighted that Mattress Firm's retail presence complements its manufacturing capabilities, enhancing innovation and customer experience. Tempur Sealy expects synergies in logistics, manufacturing, and sourcing, aiming to improve its U.S. omni-channel platform. The company also noted strong union support, stating that no labor unions have opposed the transaction.

Tempur Sealy is willing to address FTC concerns through commitments, including maintaining Mattress Firm as a multi-branded retailer and potentially divesting stores. The company remains confident in the procompetitive rationale and anticipates litigation to conclude by late 2024 or early 2025.

Positive

• Expected synergies in logistics, product lifecycle management, and sourcing initiatives.
• Enhanced U.S. omni-channel platform through the combination of Tempur Sealy and Mattress Firm.
• Strong support from labor unions representing Tempur Sealy employees.
• Potential for more targeted innovation and improved customer experience.

Negative

• FTC challenge may delay or prevent the acquisition of Mattress Firm.
• Potential legal and financial costs associated with litigation against the FTC.

Legal Expert

The FTC's challenge against the proposed acquisition of Mattress Firm by Tempur Sealy indicates significant regulatory scrutiny over this merger. The FTC's concerns likely hinge on potential antitrust issues, fearing that the merger might reduce competition in the bedding industry. This type of challenge from the FTC can be a major roadblock; litigation could delay or even prevent the deal from closing. However, Tempur Sealy's willingness to engage in commitments and potential divestitures to address these concerns shows their intention to cooperate with regulatory authorities. This could mitigate some risks associated with the acquisition but it remains uncertain how the litigation will pan out.

Investors should consider the potential legal costs and the impact of any mandated divestitures on the combined entity's profitability. Even if the merger is approved, these factors could affect the financial outlook in the short to medium term.

Market Research Analyst

The assertion by Tempur Sealy that the combination with Mattress Firm will generate significant synergies and improve customer experience is noteworthy. The merger could indeed streamline operations and improve logistics given Tempur Sealy's manufacturing capabilities paired with Mattress Firm's retail presence. However, the bedding market remains highly fragmented with numerous competitors. Therefore, while synergies might improve efficiency, the competitive landscape might keep pricing and margins under pressure.

Retail investors should keep an eye on how well these synergies are realized and if they can translate into greater market share and profitability. Key metrics to monitor post-merger would be operating margins and market share gains.

Financial Analyst

From a financial perspective, Tempur Sealy's confidence in realizing synergies and achieving operational efficiencies will be pivotal. The mention of leveraging global scale and vertically integrated infrastructure suggests potential cost reductions and higher profitability. However, the uncertainty brought by the FTC's litigation introduces a risk factor that could impact stock performance in the near term.

Investors should look at the company's past performance in similar integrations, especially in Europe as referenced and assess whether these efficiencies were successfully realized. Additionally, the potential costs associated with the litigation and any divestitures required should be factored into financial projections.

LEXINGTON, Ky., July 2, 2024 /PRNewswire/ -- Tempur Sealy International, Inc. (NYSE: TPX, "Company" or "Tempur Sealy") today issued the following statement regarding the press release issued by the U.S. Federal Trade Commission ("FTC") announcing that it would be challenging the proposed combination of Tempur Sealy and Mattress Firm Group Inc. ("Mattress Firm").

"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.

"The bedding industry is highly competitive, offering consumers a diverse selection of products, brands, price points, and purchasing channels. There are thousands of brick-and-mortar storefronts across the United States where consumers can purchase bedding products, only a small fraction of which are operated by Mattress Firm. Additionally, brick-and-mortar retailers and direct-to-consumer bedding brands sell millions of bedding products online each year.

"We continue to believe the combination of Tempur Sealy and Mattress Firm will unlock incremental benefits for all stakeholders, particularly consumers. Mattress Firm's strong retail presence complements Tempur Sealy's manufacturing capabilities, facilitating more targeted innovation, improving the customer experience, and broadening our U.S. omni-channel platform. Additionally, we expect to achieve synergies by leveraging our global scale and vertically integrated infrastructure to drive efficiencies through logistics, product lifecycle management, manufacturing optimization and sourcing initiatives. All of these factors will allow us to further execute on Tempur Sealy's mission to improve people's lives through better sleep.

"We manufacture one hundred percent of the mattresses we sell domestically in the United States, supporting the domestic workforce with thousands of jobs. We have discussed the transaction with the labor unions representing our employees and none have expressed opposition to the transaction. In fact, most of the unions have submitted letters of support, believing that the transaction will benefit their members and not adversely impact workers of other bedding companies that they represent.

"We are and have been open to appropriate commitments to address FTC concerns. Consistent with our operation of the multiple bedding retailers we have acquired in Europe, Mattress Firm will remain a multi-branded retailer, and we have already engaged with numerous Mattress Firm suppliers on post-merger supply agreements and have executed several agreements. In keeping with our multi-brand strategy, we have also offered a guaranteed slot commitment for third-party manufacturers at Mattress Firm stores. Lastly, we have been open to a divestiture of stores and supporting infrastructure.

"We are confident in the procompetitive rationale for this transaction and look forward to presenting the many benefits of the combination. 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."

Tempur Sealy intends to conduct a public conference call shortly after the FTC's complaint is publicly available.

Forward-Looking Statements

This press release contains statements that may be characterized as "forward-looking" within the meaning of the federal securities laws. Such statements might include information concerning one or more of the Company's plans, guidance, objectives, goals, strategies, and other information that is not historical information. When used in this release, the words "will," "expects," "plans," "proposed," and variations of such words or similar expressions are intended to identify forward-looking statements. These forward-looking statements include, without limitation, statements relating to the Company's expectations regarding the outcome of the pending litigation with the FTC, the expected Mattress Firm acquisition including expectations regarding post-closing supply agreements, future performance, integration of acquired companies with our business and the ability of the Company to close the acquisition on the timeline indicated or at all as well as the expected divestiture of Sleep Outfitters. Any forward-looking statements contained herein are based upon current expectations and beliefs and various assumptions. There can be no assurance that the Company will realize these expectations or that these beliefs will prove correct.

Numerous factors, many of which are beyond the Company's control, could cause actual results to differ materially from any that may be expressed herein as forward-looking statements. These potential risks include risks associated with satisfaction of closing conditions prior to consummation of the acquisition, including the outcome of the pending litigation with the FTC, or the ability to obtain the required financing for the acquisition; Mattress Firm's ongoing operations; the ability to successfully integrate Mattress Firm into Tempur Sealy's operations and realize synergies from the transaction; the possibility that the expected benefits of the acquisition are not realized when expected or at all; general economic, financial and industry conditions, particularly conditions relating to the financial performance and related credit issues present in the retail sector, as well as consumer confidence and the availability of consumer financing; the impact of the macroeconomic environment in both the U.S. and internationally on Mattress Firm and the Company; uncertainties arising from national and global events; industry competition; the effects of consolidation of retailers on revenues and costs; and consumer acceptance and changes in demand for Mattress Firm's and the Company's products and services and the factors discussed in the Company's Annual Report on Form 10-K for the year ended December 31, 2023. There may be other factors that may cause the Company's actual results to differ materially from the forward-looking statements. The Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made.

About Tempur Sealy International, Inc.

Tempur Sealy is committed to improving the sleep of more people, every night, all around the world. As a leading designer, manufacturer, distributor, and retailer of bedding products worldwide, we know how crucial a good night of sleep is to overall health and wellness. Utilizing over a century of knowledge and industry-leading innovation, we deliver award-winning products that provide breakthrough sleep solutions to consumers in over 100 countries.

Our highly recognized brands include Tempur-Pedic®, Sealy® and Stearns & Foster® and our popular non-branded offerings consist of value-focused private label and OEM products. At Tempur Sealy we understand the importance of meeting our customers wherever and however they want to shop and have developed a powerful omni-channel retail strategy. Our products allow for complementary merchandising strategies and are sold through third-party retailers, our over 750 Company-owned stores worldwide and our e-commerce channels.  With the range of our offerings and variety of purchasing options, we are dedicated to continuing to turn our mission to improve the sleep of more people, every night, all around the world into a reality. 

Importantly, we are committed to carrying out our global responsibility to protect the environment and the communities in which we operate. As part of that commitment, we have established the goal of achieving carbon neutrality for our global wholly owned operations by 2040.

Tempur Sealy Investor Relations Contact

Aubrey Moore
Investor Relations
Tempur Sealy International, Inc.
800-805-3635
Investor.relations@tempursealy.com

View original content:https://www.prnewswire.com/news-releases/tempur-sealy-international-issues-statement-on-us-federal-trade-commission-challenge-of-proposed-acquisition-of-mattress-firm-302188262.html

SOURCE Tempur Sealy International, Inc.

FAQ

Why is the FTC challenging Tempur Sealy's acquisition of Mattress Firm?

The FTC has concerns about the potential anti-competitive effects of the merger between Tempur Sealy and Mattress Firm.

What are the potential benefits of Tempur Sealy acquiring Mattress Firm?

Tempur Sealy expects to achieve synergies in logistics, manufacturing, and sourcing, enhancing its U.S. omni-channel platform and improving customer experience.

When is the Tempur Sealy and Mattress Firm acquisition expected to close?

Tempur Sealy anticipates completing the transaction by late 2024 or early 2025, pending the outcome of the FTC litigation.

What steps is Tempur Sealy taking to address FTC concerns?

Tempur Sealy is open to commitments such as maintaining Mattress Firm as a multi-branded retailer, entering supply agreements, and potentially divesting stores.

How does the Tempur Sealy and Mattress Firm merger affect consumers?

Tempur Sealy believes the merger will enhance innovation, improve the customer experience, and offer a broader range of products and purchasing channels.

How have labor unions responded to Tempur Sealy's acquisition of Mattress Firm?

Labor unions representing Tempur Sealy employees have mostly expressed support for the acquisition, with no unions opposing the transaction.