Slumping D2C Mattress Firm Purple Receives Bid to Go Private

Struggling mattress maker Purple Innovation could soon be going private.

The Utah-based company received an unsolicited, non-binding proposal from Coliseum Capital Management — its largest shareholder — to purchase all of its outstanding capital stock for $4.35 per share, according to a Monday (Sept. 19) news release.

Purple’s board “will carefully review the proposal to determine the course of action that it believes is in the best interest of Purple and all Purple shareholders,” the release stated

PYMNTS reported in March that Purple was selling 14 million shares of its Class A common stock. At the time, the company’s stock was trading at $6.51 — it was at $3.75 Monday — after peaking in the range of $40 per share a year earlier.

Read more: Purple Innovation Stock Falls 5% as Company Preps to Sell 14M Shares

The deal gave Purple’s underwriters an additional 2.1 million shares of Class A common stock, with the goal of reaching at least $25 million cash on hand from the selloff’s net proceeds. The company said that money would be used to prepay the outstanding balance of Purple’s revolving loans, according to a September 2020 credit agreement.

Ten months earlier, Purple posted a 54.8% surge in direct-to-consumer (D2C) revenue and a 47.6% surge in wholesale revenue between the first quarters of 2020 and 2021.

See more: Purple Reports Surging D2C, Wholesale Revenue Amid Strong Demand Early In 2021

Joe Megibow, then-Purple CEO, said at the time that the company “experienced strong demand early in the year, particularly in our digital channel, followed by a sharp acceleration in our wholesale business as the first quarter progressed.”

By August, Purple and its rival Casper were both dealing with supply chain issues amid rising demand for their products, as consumers focused more on home, health and wellness as the effects of the pandemic began to wane.

Purple estimated it lost roughly $50 million in sales in the second and third quarters of 2021 due to production issues. The company pledged to boost production and said it was raising prices to overcome the myriad obstacles it had seen.

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