Investing.com -- Shares of Tempur Sealy (NYSE:TPX) International Inc. (NYSE: TPX) rose 2% after the company received clearance to proceed with its $4 billion acquisition of Mattress Firm, marking a significant win against the US Federal Trade Commission's (FTC) antitrust concerns. A federal judge in Texas ruled in favor of Tempur Sealy, allowing the merger to go ahead, although the deal cannot be finalized until February 7 to give the FTC time to consider an appeal.
The decision comes as a notable defeat for the FTC, which has been ramping up antitrust enforcement under the current administration. Despite the agency's lawsuit to block the transaction, arguing it would reduce consumer choices and potentially harm competitors, Tempur Sealy maintained that online sales could mitigate any loss of competition. The company expressed satisfaction with the ruling, stating its intent to finalize the acquisition promptly.
In response to the court victory and the potential industry recovery, Wedbush analyst Seth Basham upgraded Tempur Sealy from Neutral to Outperform and increased the price target from $67.00 to $80.00. Similarly, Truist analyst Keith Hughes highlighted the merger's benefits, including an expected accretive impact of 5%-10% and synergies that could double in the future. Hughes noted that the combination of the largest domestic mattress producer and retailer comes at a time believed to be the bottom of a three-year industry downturn. He raised the price target to $72 from $69, suggesting that the stock could potentially double in the next 18 months.
"The deal and an industry recovery could lead to this stock doubling in the next 18 months, making this one of our most compelling names," said Hughes, reflecting a positive outlook for Tempur Sealy's future performance following the acquisition.
Investors are closely watching the developments, as the merger could reshape the competitive landscape of the mattress industry, bringing together two significant players in a landmark deal. The market's response to the legal win and analyst upgrades indicates optimism for Tempur Sealy's strategic growth and market position.
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