Somnigroup International (SGI) Status Update summary

Regulatory update and transaction status

• FTC has initiated litigation to challenge the Tempur Sealy and Mattress Firm combination, after over a year of regulatory review and multiple extensions granted to the FTC for its assessment.

• The company remains confident the transaction complies with the law and is prepared for litigation, emphasizing the highly competitive nature of the bedding industry and the diversity of consumer options.

• Extensive discussions with labor unions have resulted in majority support for the transaction, with no union opposition expressed.

• Commitments include substantial divestiture of stores, maintaining third-party brand floor slots at Mattress Firm, and executing post-merger supply agreements to ensure a multi-branded retail strategy.

• Litigation is expected to proceed in the coming months, with a potential closing of the transaction in late 2024 or early 2025.

Strategic rationale and stakeholder impact

• The combination is expected to deliver significant benefits to consumers through enhanced innovation, improved customer experience, and high-quality products.

• Cost synergies are anticipated from leveraging global scale, logistics, manufacturing optimization, and sourcing initiatives.

• All mattresses sold domestically are manufactured in the U.S., supporting thousands of jobs across 38 states and territories.

• Mattress Firm will continue as a multi-branded retailer, consistent with prior international acquisitions where both company and third-party brands have thrived.

Contingency planning and capital allocation

• If the transaction does not proceed, the company will continue its deleveraging strategy and expects to allocate capital toward material share repurchases, subject to board approval.

• The case is assigned to the United States District Court for the Southern District of Texas, with Judge Charles Eskridge presiding.