Conflict Resolved: Purple Corporation and Activist Investor Coliseum Capital Management Reach Agreement
Purple and Coliseum Agree on Governance Changes
Purple Innovation, the sleep solutions company known for its innovative mattresses, has announced significant changes in its governance structure following an agreement with activist investor Coliseum Capital Management.
The most notable change is the reclassification of 10 members from the 'Promoter/Promoter Group' to the 'Public' category. This move affects 9.37% of the total shareholding, signaling a shift in control structure. Additionally, Sandeep Jindal has been appointed as a Non-Executive Non-Independent Director, pending RBI approval.
In the executive-level changes, Purple has revised change-in-control definitions and ensured 100% vesting of Restricted Share Units (RSUs) upon termination without cause for selected senior leaders. This move aims to reinforce leadership stability post-agreement. The company has also delayed executive bonus payouts to incentivize ongoing commitment.
Adam Gray, a managing partner at Coliseum, has been named board chair, replacing Paul Zepf who has agreed to resign as a director. The board of directors will be reconstituted to eight members from the current seven. As part of the agreement, Purple will terminate its stockholder rights agreement.
The agreement ends Coliseum's battle to take control of the company, which began last fall. Purple's overall business has declined as the COVID-19 pandemic receded and people spent less on home goods. However, the company is aiming to gain market share in the premium end of the mattress business, with CEO Robert DeMartini at the helm.
Purple's range of mattresses now varies from $1,000 to $7,500. Last September, Purple acquired Intellibed and renamed the collection Purple Luxe. Pano Anthos has also resigned from the board. No new information about Coliseum's ownership percentage was provided in this paragraph.
In March, Purple reported a 22.2% decrease in fourth quarter revenue. For the full year in 2022, the company's net revenue fell 20.7% to $575.7 million, resulting in a net loss of $89.9 million, a significant decrease from a profit of $3.9 million the prior year.
Purple is evolving and focusing on selling the health and wellness benefits of a good night's sleep. The company's operating loss grew 72.4% to $40.3 million for the full year in 2022. Scott Peterson is slated to replace current member Dawn Zier at the 2023 annual meeting. Coliseum has agreed not to exceed 44.7% ownership in the company through its 2024 annual meeting.
[1] Source: Purple press release, link [2] Source: Purple SEC filing, link [3] Source: Purple 8-K filing, link [4] Source: Purple press release, link
- Despite the declining business due to the pandemic's impact, Purple is strategically positioning itself in the premium mattress market.
- The agreement between Purple and Coliseum Capital Management has led to significant changes, including the appointment of Sandeep Jindal as a Non-Executive Non-Independent Director and Adam Gray as board chair.
- In an effort to maintain leadership stability, Purple has revised change-in-control definitions and ensured 100% vesting of Restricted Share Units (RSUs) for selected senior leaders.
- Recognizing the importance of health and wellness, Purple is shifting its focus towards selling the benefits of a good night's sleep, with Scott Peterson set to join the board in the future.
