Casper Acquired by PE Firm Durational Capital Management

  • The mattress company Casper will be acquired and taken over by the PE company Durational Capital Management.
  • The deal values ​​it at a premium of about 94%, which puts its value at about $ 286 million.
  • Rumors have been swirling about a possible deal in recent weeks.

The direct-to-consumer sleep firm Casper will be acquired and taken over by private equity firm Durational Capital Management, the company announced Monday morning.

The deal values ​​the company at a premium of about 94% compared to the closing price on Friday, November 12, bringing the company’s value to about $ 286 million, according to Insider’s calculations.

Casper’s stock closed Friday at $ 3.55 a share. Durational Capital has agreed to pay $ 6.90 for each outstanding Casper share, the company said in a press release.

“This agreement provides a promising opportunity to realize the highest value for our shareholders, while giving Casper the necessary capital to execute on future initiatives to sustain and grow his business,” said Casper co-founder and CEO Philip Krim.

Crimea said the company evaluated a number of strategic and financial alternatives with external advisors and Casper’s board before deciding that this was the best choice.

Casper separately reported revenue of $ 156.5 million in third-quarter earnings, up 26.8% year-over-year. But top-line growth was not enough to halt the company’s losses since listing in February 2020. It reported $ 25.3 million in net losses on Monday. The company said it would not hold its conference call and webcast in the third quarter of 2021, which was previously scheduled for 6 p.m. 17.00 ET on 15 November. It plans to submit its quarterly report to the Securities and Exchange Commission.

Rumors have been swirling about a possible deal in recent weeks. The acquisition comes on the heels of Casper revealing plans to raise capital through a series of securities offerings in an S-3 application on Oct. 25, as it bled through cash, as Insider first reported.

Casper also worked with management consulting firm AlixPartners as it explored several financing options and sought to restructure its business and reduce costs, three sources with direct knowledge of the firm’s involvement previously told Insider.

Casper’s Board of Directors has unanimously approved the deal. The transaction is expected to be completed in the first quarter of 2022 and is not subject to a financing condition. Durational has committed to debt financing led by KKR Credit and Callodine Commercial Finance, LLC.

Casper shares rose more than 92% to $ 6.82 in pre-market trading on Monday after the news. Competitors Tempur-Sealy International and Sleep Number have both risen less than 1%.

Ongoing losses have become commonplace in the venture-backed startup world, the epitome of Uber and Lyft continuing to report losses in the year since they were announced. While investors in such technology companies hold on to the hope that they will eventually dominate the market and generate profits, Casper’s declining stock price in a competitive and otherwise profitable mattress industry seemed to signal declining investor confidence.

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