GoodBed CEO Mike Magnuson says bedding manufacturers, retailers and consumers would be the losers if Somnigroup International is successful in its bid to acquire major supplier Leggett & Platt.
Magnuson told Bedding News Now that the acquisition, which would unite the bedding industry’s largest manufacturer, retailer and supplier under common ownership, would be “a devastating blow” for the industry.
He said that the acquisition would ultimately spark the loss of manufacturers and retailers. It would also be bad for mattress shoppers, giving them fewer companies to choose from in the marketplace, he asserted.
In an exclusive interview with BNN, Magnuson said: “SGI’s acquisition of L&P would be another devastating blow for an industry already on shaky ground. Bedding manufacturers are already squeezed. On one end of the business, they’re fighting massive commoditization that has already moved past the low end and is now eating well into the middle of the market. And on the other end, they’re competing directly against the industry’s biggest retailer, owned by SGI. If SGI were to acquire L&P, bedding manufacturers would now be competing against the industry’s biggest supplier, too.”
The effects of that consolidation would be damaging for producers, retailers and consumers, Magnuson predicted.
Watch: Ten out of 10:00 with Mike Magnuson, founder and CEO of GoodBed
“The result of SGI’s acquisition of L&P would ultimately be the loss of bedding manufacturers, who would be at a huge disadvantage in attempting to compete against the scale and market power wielded by SGI,” he said. “As manufacturers drop away, retailers would drop away, too. And that would mean less choices for the consumer.”
Asked to assess the likelihood that the proposed acquisition would win regulatory approval, Magnuson responded: “I don’t have a lot of confidence it will be stopped by the Federal Trade Commission.”
Magnuson said that the addition of L&P to SGI’s portfolio would give SGI an even stronger position in a market in which it has significant advantages in the manufacturing and retail sectors.
“SGI is already the dominant player in both the retail and manufacturing sides of this business,” he noted. “In each area, they have a formidable advantage in size, scale and reach over their next closest competitors, one that is especially pronounced amongst the segment of consumers who want to try their mattress before buying it. An acquisition of L&P, who is already the dominant player on the supplier side of the business, would magnify SGI’s outsized market presence even more. Inevitably, many manufacturers would not be able to survive these industry dynamics. Those that do would either survive as niche players or be relegated to the commodity end of the market.”
Magnuson is a respected voice in the mattress industry, which he has served for 17 years as CEO of GoodBed, a company that helps consumers make better mattress purchasing decisions.
