The Federal Trade Commission finally gave its consent.
And Tempur Sealy International wasted no time in closing on its $5 billion acquisition of Mattress Firm in a stock and cash transaction. The deal was first announced in May 2023 at an initial price of $4 billion. The purchase price includes $2.7 billion in cash to repay Mattress Firm’s debt and other items.
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On Feb. 18, 2025, Tempur Sealy will change its name to Somnigroup International Inc. The Mattress Firm, Dreams and Tempur Sealy businesses will operate as decentralized units under the Somnigroup umbrella.
“Mattress Firm and Dreams will continue to operate as multibranded retailers and Tempur Sealy, primarily a manufacturer, will continue to serve third-party retailers as well as Mattress Firm, Dreams and Tempur Sealy direct-to-consumer channels.,” Tempur Sealy said on Wednesday.
“We have collaborated with Mattress Firm for over 35 years, and we are thrilled to welcome them into the Tempur Sealy, soon Somnigroup, organization,” Tempur Sealy chairman and CEO Scott Thompson said. “The addition of Mattress Firm will unlock incremental benefits for all stakeholders by accelerating our U.S. omni-channel strategy.”
Following the acquisition, the combined firm has pro forma sales totaling $8 billion for the 12 months ended Dec. 31, 2024. Eighty-five percent of sales are in North America, with direct-to-consumer channels accounting for 65 percent of overall sales.
Thompson said the transaction creates a “leading global bedding company” that has extensive manufacturing capabilities and a broader U.S. retail footprint. In addition, Tempur Sealy is expanding its board of directors, adding former Tailored Brands Inc. CEO and 34-year Macy’s veteran Pete Sachse to its board. Sachse was also on the Mattress Firm board.
Mattress Firm had filed for an initial public offering in January 2022, but then pulled that plan a year later. The bedding retailer’s parent Steinhoff International, which acquired a 45 percent stake in 2016 for $3.8 billion, began exploring strategic options for Mattress Firm. A few months later, in May 2023, Steinhoff found itself trying to fend off a bankruptcy filing.
Not long after, the deal with Tempur Sealy was inked for $4 billion. But the transaction was met with FTC challenges. The FTC rationale was that Tempur Sealy’s manufacturing and supply chain operations, coupled with Mattress Firm’s store network, would create “enormous power” at the merged entity, among other concerns. Under the former Biden administration, the FTC was active in keeping tabs on potential antitrust issues. It also manage to block Tapestry’s $8.5 billion deal to acquire Capri Holdings.
Tempur Sealy eventually divested some of its holdings, including retail locations and distribution centers in an agreement with the FTC to get approval for the Mattress Firm transaction .