Tempur Sealy Plans To Divest Stores To Secure Mattress Firm Deal

Tempur Sealy, a prominent bedding product designer and retailer, is currently in the process of obtaining regulatory approval for its recent acquisition of Mattress Firm. As part of its efforts to address concerns raised by the US Federal Trade Commission (FTC), the organization declared that it would sell more than 100 stores.

Mattress Firm was acquired by Tempur Sealy for a total of $4 billion in May 2024. Nevertheless, the FTC filed a challenge to the merger in July due to concerns regarding potential price increases and job losses. Mattress Warehouse, a multi-brand retailer, has already agreed to acquire 73 Mattress Firm locations from Tempe Sealy in order to address these concerns. Tempur Sealy intends to divest a total of 103 mattress locations under its Sleep Outfitters brand, as well as seven distribution centers, in addition to these sales. The company would continue to supply its products to the stores that are being sold, despite these divestments.

The Mattress Firm acquisition is anticipated to be finalized by the end of 2024 or early 2025, and the completion of these sales is contingent upon its conclusion. The FTC litigation process is scheduled to commence on November 12, 2024, and would continue for a period of two weeks.

Tempur Sealy chairman and CEO Scott Thompson stated: “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.” 

Tempur Sealy anticipates operating more than 2,800 retail locations globally upon the completion of the acquisition and divestitures. Mattress Firm accounts for approximately 50% of its North American sales. The company expects to achieve annual run-rate synergies of $100 million by the conclusion of the fourth year following the deal's closure.

In order to finance the cash-and-stock acquisition, Tempur Sealy has executed a $1.6 billion Term Loan B agreement. This strategic maneuver underscores the organization's dedication to regulatory compliance and market expansion.

Source: Retail Insight Network