In November 2015, Mattress Firm Holding Corp. (“Mattress Firm”) announced an agreement to purchase HMK Mattress Holdings, LLC (the parent company of Sleepy’s and other mattress retailers) for total consideration of $780 million. The transaction would combine the two largest retail suppliers of mattresses in the United States, with Mattress Firm generating approximately $2.5 billion in annual sales at more than 2,500 retail locations, and Sleepy’s generating more than $1 billion in annual sales at more than 1,000 retail locations.

Mattress Firm retained NERA experts Dr. Timothy Watts and Dr. Ramsey Shehadeh to evaluate the likely competitive effects of the transaction, and to assist Mattress Firm’s counsel, Norton Rose Fulbright, with economic engagement with the Federal Trade Commission (FTC) staff during its investigation. NERA conducted economic analyses of both national and local competition in the retail mattress industry using data from both parties and from industry sources. NERA’s research demonstrated that the retail mattress industry is highly fragmented at both the national level and the local level; and that Mattress Firm’s and Sleepy’s retail footprints are largely complementary with little local overlap.

NERA presented its research to the FTC in December 2015, and the FTC closed its investigation in early January. Mattress Firm expects to close the transaction in February.