Tempur Sealy Announces Mattress Firm Group Acquisition Complete

February 5, 2025  by Karen Parrish in Business Strategy, Industry   

In a separate release, the Company announced it will change its name to Somnigroup International Inc., effective Feb 18. Mattress Firm, Dreams and Tempur Sealy will operate as decentralized business units under Somnigroup International. Mattress Firm and Dreams will continue to operate as multi-branded retailers and Tempur Sealy, primarily a manufacturer, will continue to serve third-party retailers as well as Mattress Firm, Dreams and Tempur Sealy direct-to-consumer channels.  

On a pro forma basis for the acquisition of Mattress Firm, the Company generated approximately $8 billion in sales over the previous twelve months ending Dec 31, net of intercompany sales. This implies sales of approximately 85% in North America and 15% in International geographies, with approximately 65% of sales from direct-to-consumer channels and 35% from third-party retailers.

Chairman and CEO Scott Thompson said, "We have collaborated with Mattress Firm for over 35 years, and we are thrilled to welcome them into the Tempur Sealy, soon Somnigroup, organization. The addition of Mattress Firm will unlock incremental benefits for all stakeholders by accelerating our U.S. omni-channel strategy. This transaction creates a leading global bedding company with extensive manufacturing capabilities and a broader U.S. retail footprint. Together, the companies are positioned to facilitate enhanced product innovation, improve the customer buying experience, and ensure high-quality, durable products are brought to market.

Thompson continued, "We would like to extend our heartfelt thanks to all Tempur Sealy and Mattress Firm employees and suppliers for their unwavering dedication, hard work, and continued support every day. Your commitment to our mission to deliver better sleep is the cornerstone of our success. We also wish to express our deep gratitude to our legal counsel, financial advisors, and lenders, all of whom provided exceptional expertise and best-in-class capabilities that have been invaluable throughout this transaction. Finally, we would like to recognize our shareholders for their steadfast support of this transaction and their continued belief in our long-term strategy, a confidence that is clearly reflected by the 80% increase in our stock price since the transaction was announced." 

In connection with the closing of this transaction, the Company is expanding its Board of Directors through the appointment of Peter Sachse, effective today. Mr. Sachse brings more than 30 years of executive leadership experience in retail, including serving as CEO of Tailored Brands, Inc., a men's omnichannel retailer, and previously spending 34 years in various positions at Macy's, Inc. 

Thompson added, "We are pleased to have Peter Sachse join our Board of Directors and welcome his unique insights garnered through years of service in retail and on the Mattress Firm Board of Directors. His deep industry expertise will provide invaluable support as we navigate our next phase of growth."

Financial Terms of the Acquisition

The total purchase price was approximately $5 billion. The transaction was funded by approximately $2.7 billion of cash consideration (subject to adjustments, including the repayment of Mattress Firm's debt and other customary items) and 34.2 million shares of common stock. The cash payment was funded using a combination of cash on hand and proceeds from existing borrowings.

The Company expects to complete the previously announced divestiture of 73 Mattress Firm retail locations and the Company's Sleep Outfitters subsidiary, which includes 103 specialty mattress retail locations and seven distribution centers, to MW SO Holdings Company, LLC ("Mattress Warehouse") in the second quarter of 2025.

Cleary Gottlieb Steen & Hamilton LLP and Beck Redden LLP served as legal counsel and J.P. Morgan Securities LLC served as sole financial advisor to the Company. Simpson Thacher & Bartlett LLP served as legal counsel and Goldman Sachs & Co. LLC, Barclays, and Jefferies LLC served as financial advisors to Mattress Firm.

At the time of the Company's name change, shares of Somnigroup International Inc. common stock will trade on the NYSE under ticker symbol "SGI".

Business Update Call

The Company will hold a conference call on Feb 6 at 8:00 a.m. Eastern Time to discuss the information in this release.

The Company has a separate conference call scheduled to discuss the Fourth Quarter and Full Year 2024 financial results on Feb 20 at 8:00 a.m. Eastern Time.

The calls will be webcast and can be accessed on the Company's investor relations website at investor.tempursealy.com. After the conference calls, webcast replays will remain available on the investor relations section of the Company's website for 30 days.