Houston – Closing arguments in the court case here between the Federal Trade Commission and Tempur Sealy International and Mattress Firm are set for Dec. 16 in the U.S. Court for the Southern District of Texas.
The case, which kicked off last week with hearings, will determine whether Tempur Sealy International’s proposed $4 billion acquisition of its largest retail partner Mattress Firm can proceed. The deal was announced May 9, 2023.
That was 18 months ago, but the industry conversation about a possible acquisition was loud during the 2023 winter Las Vegas Market. By that point, the FTC had kicked up its investigation, research into the industry and the impact a possible acquisition could have through a wide-sweeping range of meetings and calls with bedding industry players.
Here are the key moments over the past 18 months:
The courtship between Mattress Firm and Tempur Sealy has been a long one. Seven years, according to Tempur Sealy’s Scott Thompson following the deal’s announcement. Now, the relationship has aged into an eight-year arrangement.
Last December, Tempur Sealy announced plans to divest of stores, primarily its Sleep Outfitters locations, ahead of the Mattress Firm acquisition.
In March, Tempur Sealy – not Mattress Firm – was working to sign supplier agreements with the retailer’s other mattress partners to be in effect post-merger.
Four months later, a few days ahead of the July 4 holiday, news broke that the FTC voted 5-0 to block the deal. Tempur Sealy responded saying the FTC’s decision was wrong, and Mattress Firm weighed in with its “disappointment” that same day.
Later that day, the FTC filed its lawsuit in the U.S. Court for the Southern District of Texas to block the acquisition and accusing Tempur Sealy of preparing to take out its “rivals.” Much of the complaint was redacted with bold blocks of black hiding much of the government’s argument.
The following week – Monday morning, July 8 – Tempur Sealy hosted an investor call saying it remained confident in the deal and said it expected “a successful litigation process.”
Later that same week, Tempur Sealy filed its response to the FTC’s challenge saying the agency misread the mattress industry and that the acquisition was “procompetitive.” The response went point-by-point to the FTC complaint.
In August, a less-redacted version of the FTC complaint in federal court was filed alleging Tempur Sealy was out to “block” competition. The documents shared a range of internal emails, text messages and investor presentations from executives at Tempur Sealy, as well as conversations between executives at Mattress Firm with the Tempur Sealy team. In the document, Mattress Firm is repeatedly referred to as a mattress “kingmaker” for its ability to make brands successful.
A month later, Tempur Sealy announced it had a buyer for 176 Sleep Outfitters and Mattress Firm locations under its divestiture plan announced in December 2023. Mattress Warehouse has agreed to buy the locations.
Tempur Sealy and Mattress Firm requested a two-month extension in its its administrative hearing with the FTC. That hearing had been scheduled for Dec. 4; however, it was too close with the federal court proceedings.
The next day, Tempur Sealy and Mattress Firm flipped the script and sued the FTC in the same federal court in Texas saying the government agency shouldn’t be allowed to decide the case in its administrative court. The mattress companies say allowing the administrative proceeding violates the companies’ constitutional protections.