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What is the industry saying about the Tempur-Pedic and Sealy deal?

Big announcement this week from two mattress rivals. Tempur-Pedic has put in an offer to buy Sealy for about $228.6 million in cash, paying $2.20 a share, which is a 23% premium to Sealy’s 30-day average closing price. When it is all said and done they will create a $2.7 billion global bedding company.

So what is the industry saying? We asked the members of Mattress Industry Executives on LinkedIn and here is the feedback we are getting so far.

“I think it is a defensive move but a very, very smart move.”

–David Tilley

“I’m looking forward to seeing a chain of Tempur-Pedic/Sealy retail locations. This should shake up the mattress industry.”

–Chuck Kill

“Hope there aren’t many job losses as a result.”

–Margie Fox Pierre

“Tempur-Pedic built its business by controlling its advertising dollars and message. Sealy has increased national advertising but mostly relies on the co-op model. I wonder if and how these two business models will play out going forward.”

–Stephen Kyger

“Game changer?”

–Angela Owen

“TPX growth has stagnated and the move provides growth. Challenge, as always, is execution of the integration. My personal opinion is that this is a great move for the “2nd tier” manufacturers. 65% of the industry will soon be controlled by two large, debt laden companies….”

–Barrie Brown

“Very exciting, I am waiting to see what this means for retail.”

–Shelia Corlis

Whatever your opinion, it is a bold move to be certain. Now the industry has two very large owners managing the top four bedding companies. After talking to some retailers, there is some concern that these two companies will have too much leverage on their floors now.

Here are some of the obvious questions being asked that only Tempur-Pedic and Sealy can answer:

  • Will Sealy start featuring Tempur material in their hybrid products?
  • Will Tempur-Pedic start pulling back on co-op with Sealy dealers and begin funding a larger national advertising campaign?
  • Will the anti-trust people put some handcuffs on these guys so they can’t leverage themselves too much with the retailers, which could ultimately hurt the consumer?
  • Can they service the debt effectively if the economy slows down?
  • Will Tempur-Pedic start buying coils from Sealy and create their own hybrid products?

The deal is not expected to close until the early part of next year, so these are questions that will have to wait to be answered. What we do know is that two very strong bedding brands have joined forces to create an even stronger group, here in the U.S. and in other parts of the world. With the consolidation of the bedding brands and further consolidation of the retailers out there, you have to wonder what the future holds.

It seems to me this is not the time to be caught in the middle. It could be a very bumpy road ahead for the bedding brands and retailers that don’t have a solid plan, established niche in the market, or offer a serious value proposition to the consumer that others have not tapped into.

Things are getting interesting around this industry, so buckle up and enjoy the ride. I am sure there is more to come.

2 thoughts on “What is the industry saying about the Tempur-Pedic and Sealy deal?

  1. Mark,
    Great article! I will watch with interest as this develops. Sealy has a minority shareholder group that is openly challenging the selling price as too low. I am sure this transaction will be fascinating for us observers. It is a fun time to be in the mattress business! Thank You for all you do to further RSA and consumer education in our industry!
    Pete

  2. This is a little reminiscent of Mercedes buying Chrysler. Very, very different cultures. Hard for me to see this working.

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