Purple Innovation (NASDAQ:PRPL) is trending on social media, and PRPL stock is soaring 37% today after the company received a nonbinding, unsolicited takeover offer. Purple is an online-focused “mattress in a box” company.
The largest owner of PRPL stock, Coliseum Capital Management, is looking to purchase all of Purple’s shares “that are not owned by Coliseum or its affiliates,” two of Coliseum’s top executives reported in a Securities and Exchange Commission (SEC) filing dated Sept. 17.
Coliseum offered $4.35 per share of cash for the 55% of Purple’s shares that it does not already own, Adam Gray and Christopher Shackleton stated in the filing. Shackleton and Gray are both managing partners of Coliseum Capital Management, while Shackleton is also a co-founder of the investment firm and Gray sits on Purple’s board.
Purple Innovation’s shares closed at $2.79 on Friday. In pre-market trading, they are changing hands for about $3.95.
Gray and Shackleton stated that any takeover would have to be negotiated between Coliseum and a “committee of independent and disinterested members of [Purple’s] Board.” Additionally, the executives wrote that an acquisition would have to be approved by a majority of PRPL stockholders, not including Coliseum, its affiliates, or Gray and Shackleton themselves.
Background on PRPL Stock
In the second quarter, Purple’s top line came in at $144 million, down from $182.6 million during the same period a year earlier. Its operating income dropped to -$9 million from -$2.5 million in the second quarter of 2021.
On Sept. 1, Purple bought Intellibed, which markets “gel-based mattresses scientifically designed for maximum back support, spinal alignment and pressure point relief.” Last year, Intellibed generated about $50 million in sales.
As of the market close on Friday, Purple’s shares were changing hands for just 0.3 times the company’s sales in the 12 months that ended on June 30. At the end of Q2, the company had $41.17 million of cash.
On the date of publication, Larry Ramer 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.