What happened

Shares of mattress companies Select Comfort (NASDAQ:SNBR) and Tempur Sealy International (NYSE:TPX) jumped on Thursday due to speculation that an acquisition or merger in the mattress industry was in the works. Select Comfort stock was up about 12% at 11:45 a.m., while Tempur Sealy stock had risen about 6%.

So what

This speculation about a deal in the mattress industry comes from Dealreporter. Adding to the drama: Tempur Sealy entered into a standstill agreement on June 26 with director Usman Nabi which, among other things, prohibits the disclosure of confidential information and restricts trading of the company's shares.

A Sleep Number bed by Select Comfort.

Image source: Select Comfort.

Tempur Sealy is the larger of the two companies, with annual revenue of $3.1 billion and a market capitalization of $2.9 billion. The smaller Select Comfort produced revenue of $1.3 billion last year and is valued at $1.6 billion. If Tempur Sealy were to acquire Select Comfort, it would create a mattress behemoth with nearly $4.5 billion of annual sales.

The mattress industry has been roiled in recent years by start-ups like Casper. These companies manufacture foam mattresses and mail them to customers, offering a generous return period, often 100 days. Casper reportedly nearly sold itself to retailer Target earlier this year; in the end, it raised money in a funding round led by Target. Its mattresses are also now available in Target's stores.

Given the disruption occurring in the mattress industry, a tie-up between two big players isn't far-fetched.

Now what

Shares of Select Comfort and Tempur Sealy are rising on the thinnest of rumors. While it can be tempting to buy the stocks in hopes that a deal takes place, investing based purely on rumors and speculation is a recipe for disaster. It's impossible to know the odds of a deal being struck, or even whether talks are taking place.

Having said that, the success of mattress upstarts like Casper puts pressure on established players in the industry. I wouldn't bet on it, but a merger between Tempur Sealy and Select Comfort is well within the realm of possibility.