Tempur Sealy seeks sales bounce with $4 billion deal for Mattress Firm

(Reuters) -Tempur Sealy International Inc said on Tuesday it has agreed to acquire mattress retailer Mattress Firm in a cash-and-stock deal valued at around $4.0 billion, as the leading bedding maker looks to grow its business and stem a post-pandemic weakness in sales.

Shares of Tempur Sealy (NYSE:), which said the deal was expected to be closed in the second half of 2024, were down 3% in premarket trading.

Tempur Sealy, which is one of the largest mattress makers in the U.S., said it has received a request for additional information and documentary material from the Federal Trade Commission. The company expects to work with the FTC to complete the acquisition, it added.

Mattress companies have seen a slowdown in sales in the past several quarters, struggling to sustain the explosive growth in demand seen during the early months of the pandemic, when consumers upgraded their home furnishing.

Mattress Firm, part-owned by Steinhoff International Holdings NV, is among the biggest bedding retailers in the United States, with more than 2,300 brick-and-mortar store locations. Its website was also among the top five e-commerce destinations for mattresses in 2021, according to Statista.

Lexington, Kentucky-based Tempur Sealy will pay around $2.7 billion in cash and $1.3 billion in Tempur stock issued to Mattress Firm shareholders, the companies said. After deal closure, Mattress Firm would operate as a separate business unit within Tempur Sealy.

The acquisition would give the combined company a footprint of about 3,000 stores globally, 30 online platforms and 71 manufacturing facilities. Tempur Sealy expects the deal to add to adjusted per-share earnings before synergies in the first year post-close.

Tempur Sealy, which separately reported first-quarter sales in line with Wall Street estimates, said it would also expand its board and appoint two Mattress Firm directors once the deal closes.

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