Mattress Maker Purple Innovation Is Cooperating With Activist Investor Who Sued the Company
Purple Innovation and activist investor Coliseum Capital Management are putting their bad blood to bed now that they’ve agreed on a “cooperative framework” going forward.
Coliseum had sued the Casper rival one week after nominating new board candidates and trying to invalidate Purple’s “proportional representation preferred linked stock,” how the mattress maker referred to the shares it issued under a stockholder rights agreement, or poison pill, enacted to thwart a hostile takeover.
Purple and Coliseum were also at odds over a special board committee tasked with evaluating the activist’s offer to acquire the home products company. The committee said the offer devalued the company when it rejected the proposal to take Purple off the public markets.
Describing itself as making the “World’s First No Pressure ™ Mattress,” Purple last month said fourth quarter net revenue fell 22.1 percent to $145.1 million, on a net loss that widened to $70.2 million. Wholesale revenue increased 1.3 percent from a year ago, but direct-to-consumer revenue dropped 34.5 percent.
Under the terms of the new cooperation agreement, Purple’s reconstituted eight-member board includes current directors Adam Gray, CEO Robert T. DeMartini, Gary T. DiCamillo, Claudia Hollingsworth and Dawn Zier along with Coliseum-nominated S. Hoby Darling, R. Carter Pate and Erika Serow.
Both sides agreed on Gray becoming board chair, while DiCamillo will continue to serve as lead independent director and will become chair of the nomination and governance committee. Paul Zepf and Pano Anthos are leaving the board. At the upcoming annual shareholders meeting, the board will nominate Scott Peterson, a significant stockholder and board observer since Purple’s September 2022 acquisition of Intellibed, to replace Zier, who won’t stand for reelection.
The agreement requires Purple to take back the shares it issued under the poison pill, terminate the shareholder rights plan, dissolve the special committee so that Coliseum can dismiss the lawsuit. The investor agreed not to increase its stake in the company or take any further hostile action for a set period of time.
