Casper Is Going Private—What's Happening to Outstanding CSPR Shares?

Casper stock is going private thanks to one big buyer. What's happening to outstanding CSPR shares as a result?

Rachel Curry - Author

Nov. 16 2021, Published 10:19 a.m. ET

As Casper Sleep customers the world over snooze on their beloved mattresses, the company behind the slumber is shutting the lights on its public stock. The NYSE ticker "CSPR" is being bought out by a privately held company, which will reel Casper back into the privately held arena.

Article continues below advertisement
Article continues below advertisement

What about the outstanding CSPR shares? Here's the lowdown on Casper Sleep stock as it goes from public to private.

Casper stock is going private after less than two years on the market.

Casper Sleep went public in February 2020, but its participation in the stock market has proven to be temporary. After about a year and nine months, CSPR stock is going private.

Article continues below advertisement

A private equity firm called Durational Capital Management is purchasing Casper outright, including all outstanding shares.

Why is Casper taking its stock private?

Durational Capital valued Casper at a premium. As a result, the mattress company made the fiscal decision to prioritize private equity over shareholder value. Casper probably didn't think that it would gain enough traction in the public market, despite a rush of direct-to-consumer IPOs populating the major exchanges (think Warby Parker, Allbirds, and the like).

Article continues below advertisement
Article continues below advertisement

The decision makes sense. CSPR stock's market value fell about 68 percent from its IPO through Nov. 12, the Friday before the news reported Casper is going private.

Durational cut Casper a big check and nearly doubled the stock's value.

Durational valued Casper stock at a 94 percent premium to the closing price on Nov. 12. That's exactly why CSPR stock jumped about 86 percent by the morning of Nov. 16 following the announcement.

Article continues below advertisement

Investors who got in early this week have done well considering that the deal won't close until the first quarter of 2022. That means payouts for owners of outstanding shares bought below the 94 percent premium to the closing price on Nov. 12 will profit. Ultimately, Durational is paying $6.90 for each outstanding Casper share.

Article continues below advertisement

Casper co-founder and CEO Philip Krim stated in a press release, "With a commitment to maximizing value for all shareholders, the board unanimously supports the offer from Durational and recommends that shareholders approve the transaction. 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."

Article continues below advertisement

What will happen to outstanding CSPR stock?

Technically, existing shareholders still need to approve the sale of Casper stock to the private equity firm. Considering that the payout is well above the closing price of $3.55 on Nov. 12, most investors will likely support the initiative.

Casper stock has been struggling to return to its $12 per share IPO price and its forecast seemed like it would be volatile. Even its highest market capitalization of $575 million was lower than its $1.1 billion private enterprise value estimation.

Casper shareholders should get ready to reallocate.

Casper shareholders will be able to use the cash from the buyout to invest in more lucrative options, perhaps even staying in the direct-to-consumer space. Even though stocks like Peloton (NYSE:PTON) are struggling to return to pandemic-era tidal growth, others—like Etsy Inc. (NASDAQ:ETSY), which has been on the market since 2015—are more likely to see returns.


Latest Company & Industry Overviews News and Updates

    Opt-out of personalized ads

    © Copyright 2024 Market Realist. Market Realist is a registered trademark. All Rights Reserved. People may receive compensation for some links to products and services on this website. Offers may be subject to change without notice.