M&A News: FTC Blocks Tempur Sealy’s (TPX) $4B Mattress Acquisition

The Federal Trade Commission (FTC) has blocked Tempur Sealy International’s (NYSE:TPX) proposed $4 billion acquisition of Mattress Firm Group. Tempur Sealy is the world’s largest mattress supplier and manufacturer. Meanwhile, Mattress Firm is the leading mattress retailer in the U.S.

Tempur Sealy announced the acquisition of Mattress Firm Group in May 2023. The company then said that the deal would complement its product development and manufacturing capabilities. Moreover, it will support its omnichannel strategy.

FTC’s Concerns

The FTC filed a complaint and authorized a lawsuit to block the deal. They believe that Tempur Sealy could suppress competition and raise prices for consumers. The FTC pointed out that merging Tempur Sealy with Mattress Firm’s large retail network would give the new company substantial control over the mattress market.

The FTC said Tempur Sealy plans to limit competitors’ access to Mattress Firm’s stores. This could harm other mattress suppliers. The deal might also benefit Tempur Sealy’s brands by limiting competitors’ access to retail space.

It remains to be seen how the market reacts to this development. With this backdrop, let’s look at the Street’s forecast for TPX stock.

Is TPX a Good Stock to Buy?

Wall Street analysts are bullish about TPX stock. On July 2, Truist Financial analyst Keith Hughes reiterated a Buy rating on TPX with a price target of $65. The five-star analyst said that neither the firm nor the Street have factored in the potential impact of the Mattress Firm Group deal on TPX in their estimates. Thus, he maintains his bullish stance on TPX even as FTC blocks the deal.

Overall, with five unanimous Buy recommendations, TPX stock has a Strong Buy consensus rating. The analysts’ average TPX stock price target is $64, implying 32.45% upside potential from current levels. Tempur Sealy stock is down about 4.7% year-to-date.

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