Casper Sleep, the once high-flying DTC mattress-in-a-box company whose star descended as profits shrank despite brisk pandemic-era sales, is going private in an acquisition by Durational Capital Management for about a quarter of its $1.1 billion valuation when it went public in February 2020.
At the same time, Casper founder and CEO Philip Krim is stepping down, replaced by Emilie Arel, the company’s president and chief commercial officer. Arel was most recently CEO of FullBeauty Brands during a debt restructuring. She was also CEO of Amazon competitor takeout acquisition Quidsi, launch pad of Jet.com founder and former Walmart Ecommerce head Marc Lore, and also served in executive roles at Gap and Target.
Casper shareholders will get $6.90 per share, a 94% premium to the closing share price on Nov. 12, 2021, valuing the company at about $286 million.
“With its world-class products and focus on health and wellness, we believe Casper is well-positioned for future success,” said Matthew Bradshaw, Managing Partner at Durational Capital Management, in a release. “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.”
Plans at the time of the Casper IPO included ambitious expansion into adjacent sleep categories, most of which never materialized, according to Fast Company. Casper has a chain of 72 branded stores.
Krim said the deal with Durational will create “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,” Krim said. Casper was advised on the deal by Jefferies.
For the third quarter, Casper reported revenue increased 26.8% to a record $156.5 million, including a 6.7% increase in DTC sales to $96.5 million, including orders fulfilled from its stores. However, gross profit decreased 6.7% or $4.6 million to $63.9 million. Casper’s overall net loss was up 59.4% or $9.4 million $25.3 million, including a $2.4 million one-time lease write-off charge.