Purple is once again firing back at activist investor Coliseum Capital Management after the investment firm pushed to overturn most of the mattress retailer’s board.
Coliseum, which owns 45% of the company’s shares, on Monday notified the DTC mattress brand that it seeks to replace five of Purple’s seven board members.
A special committee of Purple’s board issued a statement saying that it is “extremely disappointed” in the proxy fight Coliseum has initiated to replace board members, noting that Adam Gray, a managing partner at Coliseum and member of the brand’s board since 2018, did not express discontent with management until Purple rejected Coliseum’s takeover bid last year.
In response, Purple on Tuesday introduced Proportional Representation Preferred Linked Stock (PRPLS), a series of cumulative preferred voting stock, ahead of its shareholder meeting. The brand said it is intended to “protect all shareholders and treat them equally,” Paul Zepf, Purple’s chairman, said in a statement.
“Purple shareholders will have the opportunity for proportional representation on the Purple Board of Directors. By cumulating their PRPLS votes for certain director nominees, public shareholders can support the election of directors they believe will act independently to represent the interests of all shareholders in the boardroom, roughly in proportion to their collective ownership in the Company,” Zepf added.
As of Feb. 24, the company will issue one-one hundredth PRPLS for each share of common stock. The PRPLS, Purple said, will allow shareholders not affiliated with Coliseum to elect up to 55% of the board of directors.
Coliseum in September sent a bid to Purple to purchase the remaining shares of its common stock for $4.35 a share. The DTC brand then rejected that proposal, prompting Coliseum to seek a board overhaul.