Tempur Sealy International, a leading U.S. bedding maker, has announced plans to acquire retailer Mattress Firm in a cash-and-stock deal worth around $4 billion.

The acquisition is aimed at stemming a post-pandemic decline in sales that has affected the mattress industry in recent quarters.

Mattress Firm is one of the largest bedding retailers in the U.S., with over 2,300 brick-and-mortar store locations, and is part-owned by Steinhoff International Holdings NV. The deal would give the combined company a footprint of about 3,000 stores globally.

While the acquisition has been well-received by investors, there are concerns about the regulatory hurdles that may need to be overcome before it can be finalized.

The companies expect the deal to be closed in the second half of 2024, with analysts predicting a lengthy review by regulators.

Tempur Sealy has already received a request for additional information and documentary material from the Federal Trade Commission (FTC) and submitted a pre-merger notification in October. Negotiations with the FTC are in the “early innings,” Tempur Sealy executives said in an earnings call.

Despite the regulatory uncertainty, the companies believe they can ultimately clear the process either traditionally or through litigation and are considering all options to ensure closing, including store divestitures.

The merger agreement includes a $50 million break-up fee for FTC issues and a maximum store divestiture limit. Tempur Sealy CEO Scott Thompson said, “(The early filing helps) get a flavor of the initial reaction and make sure you understand where there might be issues.”