Tempur Sealy to sell 176 Mattress Firm, Sleep Outfitters stores in bid to gain FTC OK
Tempur Sealy International is looking to gain regulatory approval for its blockbuster deal to acquire Mattress Firm by divesting some stores.
The world’s largest mattress supplier and manufacturer said it will sell 73 Mattress Firm stores and the company’s Sleep Outfitters subsidiary, which includes 103 stores and seven distribution centers, to bedding retailer Mattress Warehouse, following the completion of its proposed acquisition of Mattress Firm. Tempur Sealy entered into an agreement to acquire the company, which is the nation’s largest mattress specialty retailer with 2,300-plus stores, in May, in a deal valued at about $4 billion.
In July, the Federal Trade Commission (FTC) unanimously voted to block the proposed acquisition amid concerns that it would suppress competition and raise prices for mattress buyers and give the companies “enormous power” in the mattress supply chain. It authorized a lawsuit in Federal Court to block the deal, with hearings scheduled to to begin before an FTC administrative law judge on Nov. 12, and expected to last two weeks.
“As part of our engagement with the FTC on the proposed acquisition of Mattress Firm, we conducted a divestiture process, which led to an agreement with Mattress Warehouse, a company with extensive mattress retail experience, a strong capital base and a capable leadership team,” said Scott Thompson, chairman and CEO of Tempur Sealy International in a statement.
With more than 320 stores, Mattress Warehouse is looking to accelerate its growth, reaching 500 stores by 2027, according to its website. The company is based in Fredrick, Md.
Tempur Sealy said it continues to believe that a successful litigation process can be completed in the coming months, which would allow the transaction to close in late 2024 or early 2025.
In a separate statement, Tempur Sealy said it has entered into a term loan agreement for $1.6 billion to help fund its cash-and-stock deal to acquire Mattress Firm.
Upon the closing of the Mattress Firm transaction and this divestiture, Tempur Sealy expects to operate over 2,800 retail locations worldwide and anticipates that half of its North American sales will come from the Mattress Firm operations. Together, Tempur Sealy and Mattress Firm's combined global footprint would include 71 manufacturing facilities, and four state-of-the-art R&D facilities worldwide.
Tempur Sealy’s portfolio includes Tempur-Pedic, Sealy and Stearns and Foster.
