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Purple may meet other bidders, Coliseum may have to raise prices – analyst

Bed and mattress showroom

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Purple Innovation Inc. (NASDAQ:PRPL) can see other bidders after its largest holder Coliseum Capital offers to buy mattress company, although it’s likely the Coliseum will eventually have to raise its bid, according to Truist. Purple 42% increase on proposal.

“Ultimately, we believe a deal will happen, but the Coliseum may have to make their offer to get this done,” Truist analyst Keith Hughes wrote in a note Monday.

The only possible strategic contractor for Purple (PRPL) would be Tempur Sealy (TPX), although a short-term lack of EBITDA would likely “stretching” the balance sheet at TPX to close a deal, Hughes wrote.

Some private equity firms that have invested in the industry may also be interested in Purple (PRPL), “but the lack of EBITDA could knock many other private equity firms down, Coliseum’s substantial ownership is likely to frustrate many bidders, in our view,” Hughes added.

The Coliseum submitted a non-binding offer to buy back all of the common stock it does not yet own for $4.35 per share on Saturday, according to a news release. 13D/A filing. This offer represents a 56% premium on Purple’s (PRPL) closing price on Friday. Coliseum owns 40.8 million shares, equivalent to 45% of PRPL shares.

burgundy (PRPL) confirmed in a statement that it has received the Coliseum proposal and said its board will carefully review the proposal to determine the course of action it believes the best interests of Purple and its shareholders.

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