Tempur Sealy to buy Mattress Firm in $4 billion deal

WASHINGTON — Bedding provider Tempur Sealy has agreed to acquire Mattress Firm in a cash-and stock-transaction valued at about $4 billion, the companies said Tuesday.

Mattress Firm, currently part-owned by Steinhoff International Holdings NV, operates more than 2,300 brick-and-mortar retail locations and an e-commerce platform. After the Tempur Sealy acquisition is complete, the two companies will have a total of some 3,000 retail stores, 30 e-commerce platforms, 71 manufacturing facilities and four research and development facilities worldwide.

“This combination will accelerate our growth trajectory and enhance operating cash flow,” Tempur Sealy Chairman and CEO Scott Thompson said in a statement. “Mattress Firm has been a valued retail partner for more than 35 years, and we look forward to welcoming their talented workforce of more than 8,100 employees to the Tempur Sealy family.”

Mattress Firm CEO John Eck added that the transaction will increase the companies' ability "to better address consumers’ needs and drive growth.”

Tempur Sealy will pay about $2.7 billion in cash and $1.3 billion in stock to Mattress Firm, which is privately held. That reflects the issuance of 34.2 million common shares, based on Monday's closing share price of $37.62.

After the transaction is complete, Mattress Firm shareholders will own about 16.6% of the combined company and Tempur Sealy shareholders will own the rest.

While Mattress Firm and Tempur Sealy have a long history as retail partners, the two have had a rocky relationship in recent years. The companies temporarily ended their partnership in January 2017 — in a move that notably removed popular Tempur-Pedic beds from Mattress Firm stores.

The following year, in August 2018, Tempur-Pedic sued Mattress Firm for allegedly "selling confusingly similar products under the ‘Therapedic’ name, and copying the look and feel of the entire Tempur-Pedic brand and consumer experience." Tempur-Pedic also accused Mattress Firm of continuing to sell Tempur-Pedic mattresses beyond the 2017 end of their partnership.

In October 2018, Mattress Firm filed for Chapter 11 bankruptcy protection and closed hundreds of stores. At the time, the Houston-based company pointed to years of overexpansion that resulted in “cannibalization” of sales. Mattress Firm’s then-CEO Steve Stagner later resigned in April 2019.

Months after Stagner's resignation, Tempur Sealy and Mattress Firm reconciled with a new, long-term supply agreement.

The companies expect to complete the newly-announced transaction in the second half of 2024. After the acquistion is complete, Mattress Firm is set to operate as a separate business unit within Tempur Sealy.

Tempur Sealy added that the company received a request frm the Federal Trade Commission for additional information and documents related to the transaction. The company plans to “work cooperatively” with the FTC to complete the acquistion.

In addition to announcing plans to acquire Mattress Firm on Tuesday, Tempur Sealy reported a first-quarter profit of $85.3 million on revenue of $1.21 billion.

On a per-share basis, the Kentucky-based mattress maker said it had a profit of 48 cents. Earnings, adjusted for one-time gains and costs, were 53 cents per share.

A year earlier, Tempur Sealy earned $130.7 million, or 69 cents per share, on revenue of $1.24 billion.