Here’s the question: Will it or won’t it?
The “it,” of course, refers to Tempur Sealy International’s proposed $4 billion acquisition of Mattress Firm and whether or not the legal process currently underway will result in the industry’s largest, most talked about deal.
The case is processing.
The hearing date in the matter between the Federal Trade Commission and Tempur Sealy and Mattress Firm is set for Dec. 4. Also, a new wrinkle, I’m told that subpoenas have been issued to a number of so-called third-party participants: those individuals who the FTC interviewed and/or deposed during its exploratory process into the mattress business. According to the case timeline, the deadline for issuing subpoenas is Sept. 17, which could mean things are progressing ahead of schedule. Or it could mean nothing other than attorneys in the case working ahead.
According to an UNOFFICIAL straw poll I conducted during the recent Las Vegas Market, executives in the bedding business are pretty evenly split on their thinking as to whether or not the acquisition will clear the legal hurdle.
Some think it will go through, and others believe there’s no way. Then, a subset of those that believe the deal will pass muster say it will likely be restructured to include a significant divestiture of stores. Interesting to note that Tempur Sealy made a move in December to sell around 200 Sleep Outfitters stores. According to its website, Sleep Outfitters currently sells Tempur-Pedic, Stearns & Foster, Sealy and a house brand Outfitters Collection, which is sold only in stores.
To be clear, this was not a scientific, data-accurate survey. The methodology was simple. Ask people a direct yes-or-no question and wait for the answer. The question: Do you think the Mattress Firm acquisition will go through? Sometimes follow up with why, and take it from there.
Those in the no camp were more vocal with their opinion and why. The resounding argument is that the FTC unanimous vote to block the deal is powerful. Flipping a 3-2 vote against the acquisition is an easier ask than flipping a 5-0 ruling. They also point out the FTC’s reference to emails and company communications from Tempur Sealy allegedly saying the deal would strangle competing mattress brands. The FTC said the plan was to “kneecap competitors and dominate the market.”
The yes campers think the FTC based its decision on a narrow slice of the mattress marketplace it called “premium” and mostly negated the e-commerce channel for mattresses.
In addition to believing that a smaller Mattress Firm store count could swing the deal, those in the subset of the yes camp think the upcoming presidential election — election day is Nov. 5 — could weigh on the case’s outcome. The thinking among the group is if the Republicans win, the deal goes through.
Of course, all of this conjecture is kind of like betting on red 14 at Las Vegas roulette tables. It may or may not happen, and no one really knows at this point. So we wait another 114 days for the official hearing date, and maybe a few days after for the judge in the matter to make his decision.
In the meantime, we can all continue reading tea leaves and offering up opinions on the matter.