Tempur Sealy International Inc. announced on Tuesday that it would acquire Mattress Firm in a cash-and-stock transaction valued at approximately $4 billion, in an effort to expand its business and reverse post-pandemic sales declines.
In the last few quarters, mattress companies have struggled to sustain the explosive growth in demand seen in the early months of the pandemic, when consumers upgraded their home furnishings.
The merger would result in approximately 3,000 locations, 30 online platforms, and 71 manufacturing facilities worldwide. Tempur Sealy anticipates that the transaction will increase adjusted earnings per share in the first year after closing, excluding synergies. The transaction is anticipated to conclude in the latter half of 2024.
Tempur Sealy CEO Scott Thompson stated, “I don’t believe it would be any more difficult to endure a recession with Mattress Firm than it would be without them.”
Mattress Firm, which is partially owned by Steinhoff International Holdings NV, is one of the largest bedding retailers in the United States, with over 2,300 stores.
The privately owned corporation dropped its plans to go public early this year and was considering its alternatives.
Mattress Firm shareholders will receive approximately $2.7 billion in cash and $1.3 billion in company stock from Lexington, Kentucky-based Tempur Sealy. After the completion of the transaction, Mattress Firm would function as a distinct business unit within Tempur Sealy.
The Federal Trade Commission has asked Tempur Sealy for additional information and documentation, the company said. In an earnings call, Tempur Sealy executives stated that negotiations with the FTC were in the “early innings.”
The companies believe they can ultimately clear the process through traditional means or litigation, and they have stated that they are contemplating all options, including store divestitures, to ensure closure.
Tempur Sealy’s stock rose approximately 6% after the company reported a first-quarter profit that exceeded expectations.