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David Perry

Tempur-Sealy deal a game changer

October 1, 2012

Tempur-Pedic's game-changing bid to acquire Sealy has been the talk of the industry since the unexpected news broke early last Thursday morning. The deal, if it goes through (and we think it will) will be good for Tempur-Pedic and it will be good for Sealy.

Together, those companies will offer the world a broad portfolio of innerspring and specialty models, under two well-known brand names. Sealy will be controlled by a bedding producer, not a private equity firm. And Tempur-Pedic teams up with a global bedding power and extends its reach, for the first time, into the important innerspring category.

The plans are to operate the two brands independently.

Will a Tempur-Pedic-Sealy union be good for the industry?

I'm already hearing a variety of answers to that question.

Some say a brand-building machine like Tempur-Pedic will dramatically boost Sealy's brand-building efforts, creating an advertising umbrella that will spark more awareness of bedding and, ultimately, more sales.

But others say increasing consolidation will reduce overall competitiveness in the industry, ultimately giving consumers fewer options. Smaller producers and retailers will find it increasingly difficult to compete in that climate, these observers say.

If the pending Simmons-Serta and Tempur-Pedic-Sealy deals both go through, about two-thirds of the industry's wholesale volume will be in the hands of just two entities.

We are still gathering opinions on what the Tempur-Pedic-Sealy deal will mean for the industry. In that spirit, we invite you to share your thoughts with us. What are the implications of this mega-deal?