2023-05-09 14:43:42 ET
Shares of mattress company Purple Innovation (NASDAQ: PRPL) dropped on Tuesday after fellow mattress company Tempur Sealy (NYSE: TPX) announced it was acquiring mattress retailer Mattress Firm in a deal valued at $4 billion. As of 2 p.m. ET, Purple stock was down 12%.
For its part, Tempur Sealy stock was flat, even though it was the company that had news today. In addition to announcing financial results for the first quarter of 2023, it announced that it's acquiring the largest specialty mattress retailer in the U.S., which is Mattress Firm.
Why would Purple stock trade down on this news? Well, Mattress Firm is the company's largest wholesale partner, and the possibility of Tempur Sealy acquiring Mattress Firm was specifically addressed in the risk section of Purple's annual report. The report says, "We understand that it is possible that Mattress Firm, Inc. may be sold to Tempur Sealy International, Inc. which could disrupt our relationship with Mattress Firm or prevent us from continuing to sell our products in favorable placements alongside Tempur Sealy products within Mattress Firm stores."
For further details see:
Why Tempur Sealy's Gain Was Purple Innovation's Pain Today