Casper Sleep (NYSE:CSPR) has been a disaster since its initial public offering (IPO) in 2020. The sleep products company made its public debut on the NYSE at $12 per share. Today, CSPR stock trades around $6 per share, down more than 40% from its IPO price. However, shareholder approval of its buyout has shares of CSPR stock soaring higher this morning.
Indeed, Casper Sleep announced that its shareholders have voted to approve its buyout. According to preliminary results from Casper’s special meeting of stockholders, roughly 69.5% of shareholders approved the buyout. In addition, the sleep company will be bought by “certain subsidiaries of Durational Consumer SPV IV,” which is an investment vehicle managed by Durational Capital Management. Durational Capital will pay $6.90 per share to take Casper Sleep private, representing a valuation of $286 million.
Roth Capital analyst Matt Koranda commented on the buyout, adding that, “The go private agreement comes as a positive surprise and appears to be a win for equity holders given the deteriorating financial position that Casper unveiled.”
With that said, let’s dive into the details of the buyout sending CSPR stock higher.
CSPR Stock: 8 Things to Know About the Buyout
- Casper Sleep co-founder Phillip Krim explained that the buyout gives “the highest value for our stockholders while providing Casper with much-needed capital.”
- The transaction is expected to close during the week of Jan. 24. Upon closing, Casper Sleep will convert to a private company.
- Furthermore, Casper Sleep is unprofitable and has reported negative earnings per share since its IPO.
- CSPR stock currently has a high short interest of 17.4% of its float. Short interest on Dec. 31 grew 60% from Dec. 15.
- Durational Capital is a relatively new investment firm that was founded in 2017.
- Past investments of Durational Capital include Bojangles, Sanderson Farms, and Churchill Downs. Additionally, Durational Capital took Bojangles private in 2018 for $593 million.
- The investment firm has discretionary assets under management (AUM) of $239 million according to the latest Form ADV.
- Finally, Casper Sleep is currently being investigated by law firm Weiss Law for “possible breaches of fiduciary duty and other violations of law by the board of directors of Casper Sleep Inc. in connection with the proposed acquisition of the company by Durational Capital Management.”
On the date of publication, Eddie Pan did not hold (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.