* Mattress deal valued at around $1.3 billion
* Mattress companies consolidating
* Recession, sexy electronics cut into mattress sales
WASHINGTON, March 8 (Reuters) - Tempur-Pedic International Inc, the Kentucky company which pioneered pricey space-age mattresses, has won approval from antitrust regulators to buy century-old Sealy Corp, the company said on Friday.
Tempur-Pedic put the total value of the transaction - stock purchases and acquired debt - at $1.3 billion.
"The combination of Tempur-Pedic and Sealy unites two highly complementary companies with iconic brands to create the first full spectrum, global bedding company," said Mark Sarvary, Tempur-Pedic's chief executive officer, in a statement.
The FTC posted letters on its website saying that it had closed its investigation into the merger, effectively indicating that it approved the deal.
The deal, which Tempur-Pedic said will close on March 18, is the latest transaction shrinking the number of U.S. mattress makers.
As recently as five years ago, no mattress company had a U.S. market share above 20 percent.
But combining Sealy and Tempur-Pedic would give it 31.7 percent of the U.S. market while Serta and Simmons, which have had common ownership since 2009, would have 33.8 percent, according to 2011 data from the industry publication Furniture Today, which calculates market share by the dollar value of sales.
The merging companies have argued, however, that their market share is lower, as measured by unit sales of beds, putting Tempur-Pedic's closer to 3 percent and Sealy around 13 percent.
Market consolidation was triggered by the great recession and the associated decline in new household formation, along with the flood of consumer electronics that compete with more utilitarian items for Americans' disposable income.
In 2007, mattress sales rose 1.4 percent to an all-time high of almost $6.9 billion and then fell sharply during the recession, according to the International Sleep Products Association. Sales were $6.3 billion in 2011, the ISPA said.
Tempur-Pedic sought out Sealy as it fights to keep the burgeoning market for expensive foam mattresses and accessories. The deal would also allow the company to gain a toehold in the bigger inner-spring segment.