Casper Sleep has entered into a definitive agreement to be acquired by Durational Capital Management LP, which will take the mattress retailer private. Additionally, Co-Founder and CEO Philip Krim has left the company, with President and Chief Commercial Officer Emilie Arel stepping into the position.
Durational Capital will pay $6.90 for each outstanding Casper share, a 94% premium over the closing price on Nov. 12, 2021. Casper’s Board of Directors has unanimously approved the transaction, which is expected to close in Q1 2022, and recommends that Casper stockholders do so as well.
The deal could help Casper overcome its current financial challenges, according to The Motley Fool. The company has yet to turn a profit — its annual loss narrowed from $93 million in 2019 to $90 million in 2020, and it lost $25.3 million in Q3 2021 despite a 26.8% year-over-year revenue boost. In late October 2021, Wells Fargo waived Casper’s requirement to maintain at least $32 million in cash on hand during the remainder of 2021 to avoid triggering a default notice.
“We are delighted to announce this transaction with Durational Capital Management that creates immediate and substantial value for shareholders and allows Casper to move forward on strong financial footing,” said Krim in a statement. “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.”
Incoming CEO Arel will leverage 20 years of retail leadership experience as she seeks to grow the brand under its new ownership. Her previous roles include CEO of FULLBEAUTY Brands, where she led the company through a debt restructuring and digital transformation; CEO of Quidsi, an Amazon company with 10 brands, including Diapers.com and Soap.com; and multiple roles at Gap and Target.
Casper has made waves in bedding retail but has yet to live up to its potential. The company aimed for a $1 billion IPO in February 2020 but was ultimately valued at $476 million. The brand has outperformed its peers in their efforts to expand in the brick-and-mortar world, but the results were not as strong as hoped. Still, Casper’s efforts have continued through partnerships with established brick-and-mortar names like Nordstrom.