Casper to be sold in private equity deal

Casper is retreating from the public market, barely two years after its entrance.

Catch up quick: Private equity firm Durational Capital Management is taking the mattress company private in a deal announced Monday.

Why it matters: Companies face less scrutiny when they are private and can more easily pivot when making operational decisions, analysts say.

• Casper is one of more than three dozen direct-to-consumer companies that have taken a buyout offer over the past decade, according to PitchBook.

Context: Mattress companies have been a magnet for PE firms, at times with disastrous outcomes.

• “There's been a lot of key interest [because] of the high margins and really good cash flow,” Seth Basham, equity analyst at Wedbush, tells Axios.
• Tempur Sealy is expected to end the year with a 45% gross margin, according to a KeyBanc report. Sleep Number is projected to see 61%.

By the numbers: Durational Capital’s offer will provide shareholders a 94% premium to Casper’s stock price Friday and give the company financial relief amid its growing losses.

Yes, but: Casper’s valuation has plummeted from a high of over $1 billion in the private markets in 2019 to just under $150 million as of last week.

The intrigue: One possible reason for the high premium on the deal — "The buyers see value and likely wanted to offer enough to get the other shareholders to vote in favor of the deal," Basham says.