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Activist Investor Wants Board Shakeup at Casper Rival

Coliseum Capital Partners, Purple’s largest stockholder, has made moves to alter the makeup of the mattress company’s board of directors by nominating five candidates for election at the annual stockholder’s meeting.

The five candidates Coliseum has nominated to the seven-member board include Adam Gray, director and managing partner and co-founder of Coliseum Capital Management. The remaining four include S. Hoby Darling, the former CEO of Skull Candy, who has most recently held executive roles at Logitech International and previously held leadership roles with Nike; Erika Serow, chief marketing officer at Bain & Company and former U.S. CEO of Sweaty Betty; R. Carter Pate, who has served as chairman of BioScrip; and Robert DeVincenzi, chairman of the board of Universal Technical Institute and lead independent director of Lazydays Holdings who’s amassed a “deep knowledge of technology, manufacturing, and supply chain.”

Coliseum Capital Partners, which also confirmed it is no longer pursuing a going-private transaction with Purple, said it supports the re-election of the company’s CEO, Rob DeMartini.

Coliseum pointed to five years of disappointing shareholder returns—with the company’s common stock trading at 54 percent below its IPO price and 89 percent below its all-time high in February 2021—as the reason behind the move.

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“While we are enthusiastic about the company’s longer-term prospects, and strongly supportive of its existing management team, we also recognize that the road ahead – particularly over the next 12-24 months – will be neither straight nor smooth,” Coliseum’s letter to stockholders read. “Purple needs, and shareholders deserve, a far nimbler board with a heightened sense of urgency to help management navigate these challenges and halt further deterioration of shareholder value.”

Activist investors have made waves at a number of companies over the past year, including Bed Bath & Beyond, Dollar Tree, and Kohl’s, whose new CEO was an activist’s pick.

Coliseum bought into Purple during its February 2018 de-SPAC merger, which funded around $110 million (about half) of the equity capital the mattress company raised to continue operations. Now the investor owns nearly 47 million shares or approximately 45 percent of Purple’s common stock, making it the largest stockholder.

“We are optimistic that, with the significant changes in Purple’s governance we are proposing, Purple will be much better positioned to continue its journey as a publicly traded company,” Coliseum said in its notice. “We believe that success is attainable, but it is not assured; without substantial change, we lack confidence in the current board’s ability to help navigate these challenging times.”

Purple responded to the announcement with a statement saying it was “extremely disappointed” and that Gray has not expressed “discontent with the way the business was being managed or the company’s strategic direction.”

“Mr. Gray’s posture only changed in January when the company rejected Coliseum Capital’s undervalued buyout proposal of $4.35 per share,” the statement said. “Notably, Purple’s stock has closed over that price for the past 75 days. Only in January, after the company turned down Coliseum’s opportunistic proposal, has Coliseum leveled criticisms and initiated the process to replace the majority of the Board with individuals of Coliseum’s choosing.”

Purple pointed out that each of Coliseum’s board nominees has a current or previous relationship with the investor, “which may affect their ability to act independently of Coliseum and on behalf of all Purple shareholders.”

Purple continued to say that while it plans to work with Coliseum, it sees the investor’s “efforts to gain control of Purple without paying shareholders a suitable premium” as a disruption to its business.

“We remain interested in working cooperatively with Coliseum, and we will continue to seek to do so while protecting the interests of all shareholders,” the statement said. “The special committee will review and consider Coliseum’s nomination notice in accordance with the Company’s bylaws and applicable law.”