Dive Temporary:
- Tempur Sealy and Mattress Agency on Tuesday requested a federal decide in Texas to subject a preliminary injunction to halt a Federal Commerce Fee courtroom continuing set to begin Tuesday. The FTC is attempting to dam Tempur Sealy’s $4 billion acquisition of Mattress Agency on grounds that it will create a mattress monopoly.
- Within the doc, Tempur Sealy and Mattress agency requested a federal decide to maneuver up the listening to date for the businesses’ injunction request. Doing so would maintain the businesses from litigating the federal courtroom case and the FTC’s administrative listening to, which is presently set to begin Dec. 4.
- On Thursday, Tempur Sealy reported complete Q3 web gross sales of $1.3 billion, an almost 2% rise from $1.27 billion a 12 months earlier. The corporate’s North American web gross sales have been flat, however its worldwide enterprise phase rose 12.4% t. Internet earnings rose 14.7% to $130 million from $113.3 million 12 months over 12 months.
Dive Perception:
Tempur Sealy sees its acquisition of Mattress Agency as integral to its long-term progress and stopping the deal from shifting ahead would trigger each firms substantial monetary hurt, they stated in courtroom paperwork.
The FTC sued Tempur Sealy in July to dam the deal. Tempur Sealy, in flip, sued the FTC in October, looking for to dam the company’s administrative proceedings that might derail the acquisition.
Tempur Sealy’s most not too long ago filed criticism in opposition to the FTC asks a decide to dam the FTC problem of the Mattress Agency merger by its personal separate administrative continuing along with a federal courtroom continuing, a transfer that may successfully provide “the FTC two pictures at us by utilizing two totally different courts,” CEO Scott Thompson stated throughout an earnings name.
Final month, Tempur Sealy stated it efficiently closed on a $1.6 billion time period mortgage. It plans to make use of the mortgage proceeds, together with money obtainable and proceeds from different debt, to fund the money consideration for its acquisition of Mattress Agency.
However the FTC sees the potential union as a violation of antitrust legislation. Of their newest authorized problem, Mattress Agency and Tempur Sealy say the FTC’s means to draft and resolve its personal administrative expenses — the result of which should be appealed to the identical group that first introduced the criticism — is a battle of curiosity.
In its courtroom problem, the FTC stated Mattress Agency “is the one most vital retail channel for mattress manufacturers. It may possibly drive huge volumes of gross sales by its unmatched client attain, and mattress manufacturers jostle to entry its ground area. Permitting Tempur Sealy to purchase Mattress Agency would upend this aggressive dynamic, giving Tempur Sealy monumental sway over the destiny of its rivals.”
To assuage regulators’ issues that the merger would inhibit competitors within the enterprise phase, Tempur Sealy in September agreed to divest about 175 shops to rival retailer Mattress Warehouse. That settlement, reached in live performance with the FTC, is contingent on closing the Mattress Agency deal, Thompson stated.
Whereas the authorized points play out, Tempur Sealy’s third quarter outcomes barely beat high and backside line consensus expectations, Wedbush analysts led by Seth Basham stated in a Thursday notice.
Tempur Sealy narrowed its fiscal 12 months steering. It now anticipates 2024 gross sales will likely be barely decrease than the prior 12 months. The analysts additionally famous that the corporate’s Q3’s gross margin of 46.2% was worse than the consensus forecast of 46.8% and beneath the agency’s 46.9% estimate.
“[Tempur Sealy] possible resorted to extra promotions to drive gross sales that have been ineffective on this gentle demand surroundings,” Wedbush wrote in its assertion. “[The company] resorted to extra aggressive price chopping to fulfill EPS expectations, which we view as decrease high quality earnings.”
