Local ShoppingPurple settles fight with activist investor Coliseum Capital Management

Purple settles fight with activist investor Coliseum Capital Management

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Dive Brief:

  • DTC mattress brand Purple has avoided a major proxy fight with its largest stockholder, Coliseum Capital Management, by establishing a cooperative governance framework with the activist investor, according to a press release. The agreement between Purple and Coliseum essentially ends the latter’s battle to take control of the company, which began last fall when it sent in an unsolicited takeover bid and later attempted to replace the majority of Purple’s board of directors.
  • As part of the agreement, Purple will terminate its stockholder rights agreement (also known as a poison pill) that it enacted last year in response to the takeover bid. Coliseum has also agreed not to exceed 44.7% ownership in the company through its 2024 annual meeting.
  • Purple’s board of directors will be reconstituted to eight members from the current seven, with three new members joining that were previously nominated by Coliseum. Adam Gray, a managing partner at Coliseum, has been named board chair, replacing Paul Zepf, who agreed to resign as a director.

Dive Insight:

Purple is shaking up its board in an agreement with activist investor Coliseum Capital Management.

In addition to Zepf leaving the board, Pano Anthos has also resigned. Additions to the board will include Hoby Darling, Carter Pate and Erika Serow. Scott Peterson, a significant stockholder, is slated to replace current member Dawn Zier at the 2023 annual meeting. Zier previously said she intended to not stand for reelection.

Current Purple board member and Lead Independent Director Gary DiCamillo commented on the agreement with Coliseum: “We are pleased to reach this agreement with Coliseum and share its enthusiasm in positioning the company to fully focus on its business and generating value on behalf of all stakeholders.”

Purple, known for creating the “World’s First No Pressure Mattress,” has been undergoing changes to its strategy and marketing approach since seeing its overall business decline as the COVID-19 pandemic receded and people were no longer spending as much on home goods.

Under the direction of current CEO Robert DeMartini, Purple is seeking to gain market share in the premium end of the mattress business. Toward that end the company acquired Intellibed last September and has renamed the collection Purple Luxe. Purple now offers consumers a range of mattresses priced from $1,000 to $7,500. 

DeMartini has publicly talked about Purple’s need to evolve and mature, by starting to sell the health and wellness benefits of a good night’s sleep.

“Throughout his first 16 months as CEO, Rob has demonstrated strong command for the business,” Gray said in a statement, “inspiring Coliseum to invest meaningfully in support of the transformative vision he has established, the team he is building, and the key strategic and operating priorities he has pursued.” 

In March, Purple reported that fourth quarter revenue fell 22.2%. For the full year in 2022, the company reported net revenue fell 20.7% to $575.7 million, while operating loss grew 72.4% to $40.3 million. Net loss was $89.9 million for the year, down from a profit of $3.9 million the prior year.

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