Today, shares of Casper Sleep (NYSE:CSPR) opened higher by as much as 90%. This price surge is a result of private equity firm Durational Capital Management taking the mattress maker private. The deal values Casper Sleep at roughly $268 million, or $6.90 per share. Volume in CSPR stock as of this writing was 14.8 million, more than 7 times greater than the daily average volume of 1.4 million.
The deal is well-received by the board of Casper Sleep, receiving unanimous support. The board also urged shareholders to approve the buyout.
Shareholders of CSPR stock will receive $6.90 per share in cash if the deal is approved. The deal is expected to close in the first quarter of 2022.
CSPR Stock Background
Founded in 2013, Casper Sleep’s business model aims to operate under the direct-t0-consumer (D2C) approach. Essentially, Casper and other D2C retailers want to avoid middlemen and save both buyers and sellers money in the process. However, Casper Sleep also sells its mattresses via wholesalers, such as Target (NYSE:TGT) and Costco (NASDAQ:COST). Additionally, the company opened up several retail store locations to support its D2C model.
Casper Sleep has had a rocky start after its IPO in early 2020, which saw shares start trading for $14.50 each. Since then, shares have tumbled 40%. Before today’s announcement, shares of CSPR stock were down 75% from the IPO price.
This means that restless shareholders should welcome this buyout, as it seems Casper Sleep is desperately in need of outside capital and consultation to bolster its business.
Who Is Durational Capital?
Durational Capital is a relatively new private equity fund co-founded in 2017 by Matthew Bradshaw and Eric Sobotka. The firm’s last major investment was taking chicken-sandwich maker Bojangles private in a deal valued at $593 million. The firm previously held a stake in Kentucky Derby owner Churchill Downs, which it sold in mid-2019.
Casper Sleep Outlook
Casper Sleep CEO and co-founder Philip Krim has a rosy outlook for the future of the company. He stated that “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.” With the board of directors and executive management both in support of this deal, it seems like this may be the best path going forward for the mattress maker.
On the date of publication, Eddie Pan did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
