Houston – The U.S. Court for the Southern District of Texas will hear closing arguments in the lawsuit involving the Federal Trade Commission, Tempur Sealy International, and Mattress Firm on December 16.
Hearings in the case began last week and will decide if Tempur Sealy International’s proposed $4 billion acquisition of Mattress Firm, its largest retail partner, can move forward. The agreement was made public on May 9, 2023.
Even though that was eighteen months ago, there was a lot of industry talk regarding a potential takeover at the winter Las Vegas Market in 2023. Through a wide range of meetings and phone conversations with bedding industry participants, the FTC had by that time intensified its investigation, study, and analysis of the sector and the potential effects of a potential purchase.
These are the Key movements of the last 18 months:
Tempur Sealy and Mattress Firm have been courting each other for a while. Scott Thompson of Tempur Sealy stated after the purchase was announced that it would take seven years. The partnership has now developed into an eight-year agreement.
Prior to the Mattress Firm acquisition, Tempur Sealy said last December that it would be selling off stores, mostly its Sleep Outfitters sites.
Not Mattress Firm, but Tempur Sealy, was negotiating supplier contracts with the retailer’s other mattress partners in March that would take effect after the merger.
A few days before the July 4 holiday, four months later, it was announced that the FTC had blocked the deal with a 5-0 decision. That same day, Mattress Firm expressed its “disappointment,” and Tempur Sealy replied that the FTC’s ruling was incorrect.
Later same day, the FTC accused Tempur Sealy of planning to eliminate its “rivals” and filed a lawsuit in the U.S. Court for the Southern District of Texas to stop the acquisition. Much of the government’s argument was obscured by bold black blocks that were used to redact a large portion of the complaint.
Tempur Sealy had an investor call the next week on Monday, July 8, stating that it was still confident in the purchase and that it anticipated “a successful litigation process.”
Tempur Sealy responded to the FTC’s challenge later that same week, claiming that the acquisition was “procompetitive” and that the agency had misjudged the mattress market. The answer addressed the FTC complaint in detail.
A less-redacted version of the FTC lawsuit, which claimed Tempur Sealy was trying to “block” competition, was filed in federal court in August. A variety of corporate emails, texts, and investor presentations from Tempur Sealy executives were included in the records, along with discussions between Mattress Firm management and the Tempur Sealy team. Because of its capacity to propel companies to success, Mattress Firm is frequently referred to in the document as a mattress “kingmaker.”
A month later, Tempur Sealy revealed that, as part of its December 2023 divestiture strategy, company had found a buyer for 176 Sleep Outfitters and Mattress Firm sites. The locations will be purchased by Mattress Warehouse.
A two-month extension was asked by Tempur Sealy and Mattress Firm during its administrative hearing with the FTC. The hearing was supposed to take place on December 4th, but it was too near to the federal court proceedings.
The following day, Mattress Firm and Tempur Sealy reversed course and filed a lawsuit against the FTC in the same federal court in Texas, arguing that the government organization shouldn’t have the authority to determine the matter in its administrative court. The mattress manufacturers claim that permitting the administrative action goes against their constitutional rights.
