FTC Sues to Block Tempur Sealy’s $4.3 Billion Acquisition of Mattress Firm

The lawsuit, filed in a Houston federal court, holds that the deal could lead to job losses for manufacturing workers and that Tempur Sealy (NYSE: TPX) would gain an unfair advantage over competitors in the bedding industry. According to the FTC, the merger could reduce market competition, allowing the company to dominate pricing and product offerings.

Tempur Sealy has responded to the FTC challenge, arguing that the bedding industry remains highly competitive and that Mattress Firm only represents a small portion of the retail market. Tempur Sealy expressed confidence in its ability to resolve the case and proceed with the acquisition by late 2024 or early 2025.

Related: Court Dismisses Monopoly Claims Against Tempur Sealy

Both companies have enlisted top legal experts to defend the deal. Tempur Sealy has retained Cleary Gottlieb Steen & Hamilton, with a legal team led by Bruce Hoffman, a former FTC competition bureau director, while Mattress Firm is represented by Simpson Thacher & Bartlett, whose team includes antitrust co-leader Sara Razi. On the opposing side, the FTC has brought in Allyson Maltas, a former Latham & Watkins attorney who joined the agency earlier this year.

The FTC’s challenge has drawn attention for being a rare “vertical” merger challenge—a type of merger where the two companies involved do not directly compete in the same market. U.S. antitrust authorities have historically struggled to win such cases in court, making this litigation a closely watched test of the agency’s ability to block non-traditional mergers and one that could set a precedent for future antitrust challenges, particularly in industries with complex supply chains and distribution networks.