Tempur Sealy International, Inc. (NYSE:TPX) faces a roadblock as the Federal Trade Commission (FTC) voted unanimously to block its proposed $4 billion acquisition of Mattress Firm Group Inc.

The merger, which would combine the world’s largest mattress manufacturer with the nation’s largest mattress retailer, has raised significant competition concerns, per the regulator.

The FTC issued an administrative complaint and filed a lawsuit to halt the acquisition, alleging that Tempur Sealy’s acquisition of Mattress Firm would suppress competition and raise prices for millions of consumers.

The merger would grant the combined company enormous control over the mattress supply chain, integrating manufacturing with retail operations.

The FTC claims that Tempur Sealy plans to limit competitors’ access to Mattress Firm’s network, potentially harming American mattress manufacturers, leading to reduced output, factory closures, and job losses.

“This deal isn’t about creating efficiencies; it’s about crippling the competition, which would raise prices on an essential good and could lead to layoffs for good paying American manufacturing jobs in nearly a dozen states,” said Henry Liu, Director of the FTC’s Bureau of Competition.

Mattress Firm, with its vast retail footprint, is crucial for mattress suppliers like Serta Simmons Bedding and Purple Innovation Inc. (NASDAQ:PRPL).

The acquisition could allow Tempur Sealy to dominate the premium mattress market by restricting rivals’ access to retail channels, leading to higher prices and reduced product quality.

The FTC alleges that the merger could result in Tempur Sealy limiting rivals’ access to Mattress Firm’s stores and prioritizing its products.

The majority of mattresses sold in the U.S. are manufactured domestically, with sales reaching $7.8 billion last year, compared to $809 million in imports, according to the International Sleep Products Association, reported Reuters.

To address regulatory concerns, Tempur Sealy has suggested divesting some stores and maintaining agreements with other mattress manufacturers.

However, the FTC remains firm on its stance against the merger, emphasizing the potential harm to competition and consumer choice.

Earlier today, Tempur Sealy issued a statement that will hold a conference call on Monday, July 8th, to discuss its response to the filing of FTC complaint. The company said its commentary will be limited as the acquisition is being challenged in court. 

Price Action: TPX shares closed higher by 2.35% at $48.32 on Tuesday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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