Purple Innovation (PRPL)Announces Cooperative Framework with Coliseum Capital
Key Summary: Purple Innovation ($236M market cap) rejected Coliseum Capital's $4.35/share acquisition offer in 2023, leading to a governance dispute. Coliseum (44.7%) proposed board restructuring and filed a lawsuit against Purple's preferred stock issuance. By April 2023, Purple and Coliseum reached a Memorandum of Understanding to reconstitute the board with three Coliseum-nominated directors joining eight total members.
Market Cap: $236 million | Purple Innovation, Inc. designs and manufactures mattresses, pillows, and cushions.
- On September 17, 2022, Coliseum Capital Management proposed to acquire the company for $4.35 per share. On January 12, 2023, the company rejected the proposal.
On January 13, 2023, Coliseum submitted a letter to the Chairman of the Board setting forth a new proposal (the “Cooperation Proposal”), which included:
- expanding the size of the Board to nine members, consisting of the company’s current CEO, Robert DeMartini; Mr. Gray; two current independent directors of the company to be agreed upon by the company and Coliseum; two additional Coliseum-affiliated directors; two directors identified by Coliseum who would be independent under Nasdaq Stock Exchange rules and not affiliates of Coliseum; and a new director to be agreed upon by the company and Coliseum who would be independent under Nasdaq Stock Exchange rules and not an affiliate of Coliseum;
- an agreement that Coliseum would formally withdraw the proposal;
- an agreement that the company would terminate the Stockholder Rights Agreement, dated September 25, 2022; and
- an agreement that Coliseum would not acquire greater than 50% ownership of the common stock, subject to certain exceptions.
- On January 16, 2023, the Special Committee provided a response to the Cooperation Proposal that, in Coliseum’s view, did not provide a basis for agreement. While Coliseum would prefer to reach an agreement with the company, in the absence of such an agreement, Coliseum intends to nominate a slate of directors for election at the 2023 AGM, which slate would constitute a majority of the Board. Source
- On February 13, 2023, Coliseum Capital Management (44.7%) submitted a notice to the company of its intention to nominate five candidates for election to the Board at the 2023 AGM.
- On February 21, 2023, Coliseum Capital filed a lawsuit in the Delaware Court of Chancery to invalidate Purple’s recently issued “Proportional Representation Preferred Linked Stock,” which Coliseum believes deprives Purple stockholders of a fair and democratic election of directors at the company’s 2023 Annual Meeting. SourceUpdateOn April 13, 2023, the company announced that it had entered into a binding Memorandum of Understanding to establish a cooperative governance framework (the “Planned Cooperation Agreement”) with Coliseum Capital Management, LLC (44.6%). Under the terms of the Planned Cooperation Agreement, which is anticipated to be executed promptly, the Purple Board will be reconstituted to consist of eight directors. Five of the directors currently serve on the Board. The three additional directors who will join were previously nominated by Coliseum in connection with the company’s 2023 AGM. Source
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