NEW YORK – Casper Sleep Inc. announced Monday that is has entered a definitive agreement to be purchased by Durational Capital Management LLC.
Casper’s Board of Directors has unanimously approved the transaction and recommends that shareholders also approve and adopt the sale and merger agreement.
According to the agreement, Casper common shareholders will receive a cash consideration of $6.90 per share, which the company said represents a 94% premium based on the closing share price on Nov. 12. It also represents an estimated premium of 80% of the 30-day volume weighted average price ending on Nov. 12.
The sale is expected to close in the first quarter of 2022 and is subject to shareholder approval. The company said that officers and directors and affiliated investors who own or control about 28% of the company’s outstanding shares already have voted in favor of the sale.
Durational has committed debt financing led by KKR Credit and Callodine Commercial Finance LLC.
Casper co-founder and CEO Philip Krim said the company was pleased to announce the transaction with Durational Capital Management “that creates immediate and substantial value for shareholders, and allows Casper to move forward on strong financial footing. In consultation with outside advisors, Casper’s Board of Directors evaluated a range of strategic and financial alternatives over several months and determined, after careful consideration, that the transaction proposed by Durational is superior to all other alternatives available. With a commitment to maximizing value for all shareholders, the Board unanimously supports the offer from Durational and recommends that shareholders approve the transaction. This agreement offers a promising opportunity to realize the highest value for our stockholders while providing Casper with much needed capital to execute on future initiatives to sustain and grow its business.”
Durational Capital Management officials also applauded the transaction.
“We are excited to invest in Casper given its iconic brand, strong growth profile and track record of innovation,” said Eric Sobotka, managing partner at Durational Capital Management.
Matthew Bradshaw, also a managing partner at Durational Capital Management, added, “With its world-class products and focus on health and wellness, we believe Casper is well-positioned for future success. We look forward to partnering with the Casper team to build on the strength of the brand and to create new opportunities for the company to thrive.”
The companies said that Jefferies LLC is serving as financial advisor and Latham & Watkins LLP is serving as legal advisor to Casper Sleep Inc. for the proposed transaction. Kirkland & Ellis LLP also is serving as legal advisor to Durational Capital Management for the proposed transaction.
In other news, the company also announced third quarter financial results and a change in management.
Emilie Arel, president and chief commercial officer at Casper, has been appointed CEO, a role held by company co-founder Philip Krim. The change is effective Nov. 15.
Third quarter revenue totaled an all-time record of $156.5 million, a 26.8% increase. Gross profit fell by $4.6 million to $63.9 million, a 6.7% decline. The company’s net loss rose by $9.4 million, to $25.3 million, a 59.4% increase.
Direct-to-Consumer revenue, including revenue from Casper’s 72 retail stores and e-commerce channel increased to $96.5 million, a 6.7% increase, while retail partnership revenue rose 78.6% to $60 million.