Sleep Country Canada Holdings (TSX: ZZZ) announced the acquisition of the Canadian assets of mattress retailer Casper Sleep.
Announced on Monday, the acquisition is part of Sleep Country’s omnichannel strategy and will help accelerate Casper Sleep’s expertise and growth in the retail omnichannel sector.
“We are very excited to acquire 100 per cent of Casper’s Canadian retail business, who invested over $1 billion globally to build a leading brand that elevated the importance of a good night’s sleep for all,” said Stewart Schaefer, president and CEO of Sleep Country.
“With their omnichannel business, and their mission to deliver a frictionless and elevated sleep retail experience, they align perfectly with our strategic omnichannel journey that began 4 years ago.”
The acquisition involves an upfront payment of USD$20.6 million to Casper Sleep, as well as a marketing transition fee of USD$4.5 million over the next four years. Sleep Country will also receive three-year warrants, which will convert into a 1 per cent stake in Casper Sleep, upon exercise.
Furthermore, Sleep Country has invested USD$20 million in five-year convertible notes, which could convert into 5 per cent of Casper Sleep’s shares.
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Hard times lead to acquisition
Casper Sleep designs, manufactures and sells mattresses and other sleep-related products, including pillows, sheets and bed frames. Founded in 2014 and headquartered in New York City, Casper Sleep sells its products primarily online and through partnerships with various retail stores.
The company has expanded its product offerings over the years and now offers a range of mattresses with different levels of support and firmness, as well as other sleep-related accessories. Casper Sleep has gained a significant presence in the direct-to-consumer mattress industry.
“We are thrilled to expand upon our retail journey by partnering up with one of North America’s top sleep retailers,” said Emilie Arel, CEO of Casper Sleep.
“Sleep Country has been a retail mattress legacy for almost 3 decades, and sharing best practices with this leading retailer only helps accelerate our expertise and rapid growth in the retail omnichannel space.”
In April 2020, Casper laid off 21 per cent of its staff after a mix of its poor performance in its initial public offering and declining revenues due to the COVID-19 pandemic. Additionally, the company’s chief financial officer and chief operating officer Greg Macfarlane left the company in May of 2020.
By November 2021, Casper announced it was being acquired by Durational Capital Management, and the deal was completed in January 2022. Shortly after Casper’s stock was delisted from the New York Stock Exchange.
Sleep Country shares rose $0.37 on Monday to close at $22.83.
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