Casper to be acquired by private equity firm, CEO steps down

Dive Brief:

Just under two years after making its public trading debut, Casper has inked a deal to be taken private again. The DTC mattress brand on Monday announced it has entered into a definitive agreement to be acquired by private equity firm Durational Capital Management. The deal is expected to close in the first quarter of 2022.
Through the deal, shareholders will receive $6.90 for every share outstanding, about a 94% premium above Casper's Nov. 12 closing price of $3.55 a share, according to a company press release. Durational said it has committed debt financing led by KKR Credit and Callodine Commercial Finance.
In a separate announcement, Casper said co-founder and CEO Philip Krim has stepped down from the chief executive role. Succeeding him as CEO is Emilie Arel, Casper's president and chief commercial officer.

Dive Insight:

Casper entered the public markets in February 2020 before the impacts of the pandemic were fully realized in the U.S. and before the flood of DTC brands entering the public markets this year.

But as the pandemic rattled much of the industry, the DTC mattress brand was uniquely positioned to benefit from shifting consumer behavior. Selling home-related items, a category in high demand, and operating primarily online helped push Casper's revenue up 13% to $497 million in fiscal 2020. And yet, the DTC brand has consistently struggled to turn a profit, reporting a net loss of $89.6 million in the same period.

Casper on Monday reported third quarter net revenue increased 26.8% to $156.5 million — a quarterly record, according to the company. Direct-to-consumer revenue grew 6.7% to $96.5 million, while retail partnership revenue grew 78.6% to $60 million. Net loss widened 59.4% to $25.3 million.

The deal with Durational to go private allows Casper to "move forward on strong financial footing," Krim said in a statement. "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."

While IPOs have been gaining steam lately, acquisitions and buyouts have consistently been the most popular exit paths for direct-to-consumer brands over the past 10 years, according to data provided by PitchBook. As of Aug. 3, 66 DTC brands exited via acquisition, while 38 exited through a buyout.

Krim's exit from the CEO role comes as other DTC founders step down from the chief executive spot as their businesses grow, including at Everlane, Dollar Shave Club, Stitch Fix and Mirror.