LEHI, Utah – Direct-to-consumer mattress brand Purple Innovation has acquired fellow Utah-based gel mattress manufacturer Intellibed in an all-stock deal for 8 million shares of Purple Class A common stock.
The deal closed Wednesday following the market close. Purple’s stock closed Wednesday at $2.86, a 3.05% drop. At that price, the deal would be valued at $22.88 million. In after-hours trading the stock got a 0.7% boost to $2.88.
Intellibed’s 2021 revenue is estimated at $50 million. Bob Rasmussen, founder of Intellibed, will remain with Purple and will oversee manufacturing for Intellibed and work with Purple Chief Operating Officer Eric Haynor. Colin House, Intellibed’s CEO, will transition out of the company.
In its latest earnings report, Purple reported net revenue for the second quarter ended June 30 dropped 21.1% of $144.1 million, a 21.2% decline from $182.3 million in the same quarter last year. The company also revised its outlook for the balance of the year. The company said it expects full year 2022 net revenue to be between $570 million and $590 million, compared with its prior range of $650 million to $690 million.
Rob DeMartini, CEO of Purple, told Furniture Today that the deal reunites the company’s patented gel technology under one brand. The strategy moving forward is the company’s “pivot to premium” model that will position the Intellibed product as part of Purple’s line, he said.
“Intellibed will come under the marketing engine of Purple,” DeMartini said, adding that it will likely be a collection inside of the Purple brand. “We’ve spoken with our largest customers, and they have encouraged us to move swiftly to bring the name under the Purple brand.”
The acquisition allows Purple to create a range of premium products priced to retail from $1,399 up the luxury prices above $7,000. DeMartini refers to the move as the company’s “pivot to premium” to deliver high margins and more revenue in the category.
DeMartini is bullish on the future of the gel in the bedding segment.
“Gel technology is where memory foam was early on. The same play may be here,” he said. “The way the memory foam business was developed into a significant subset of the mattress business. We see that same growth opportunity for gel.”
Purple and Intellibed, both based in Utah, have been somewhat friendly competitors in the gel mattress arena.
In 1998, brothers Tony and Terry Pearce developed a stretchy gel-like material and licensed the patent for use in insoles for shoes and for hospital beds. In 2010, the duo branched out and began selling seat cushions made from the polymer that would become the foundation for the material used in the Purple mattress. Prior to 2010, the Pearces had licensed the use of the material to Intellibed for use in mattresses.
With a 2015 Kickstarter campaign, the brothers raised more than $171,000 and officially introduced the mattress in 2016. Since then, Purple and Intellibed have both manufactured gel-grid mattresses: Purple under its Purple GelFlex Grid and Intellibed with its blue GelMatrix.
“Intellibed is an excellent fit for Purple,” DeMartini said. “Intellibed has licensed certain aspects of Purple’s gel technologies for many years; therefore, this acquisition allows us to consolidate our IP under one roof and truly capitalize on the increased consumer interest and demand for Gel Grid technology. Additionally, Intellibed’s premium market position allows Purple to accelerate its product development schedule by several years and immediately address the more luxury, higher-margin segment of the sleep and wellness industry. We are excited about the combined potential of our two highly talented teams.”
As part of the deal, Purple will retain Intellibed employees, who were told of the acquisition Wednesday afternoon and offered jobs commensurate with their current duties. DeMartini said the company will now operate four factories: the Intellibed headquarters and manufacturing facility in Salt Lake City, two Purple facilities in Utah and one in Georgia.
“Intellibed is joining forces with one of the most respected sleep innovators in the industry,” said Scott Peterson, chairman of the board for Intellibed. “This merger provides Intellibed with a great opportunity to reach a much broader consumer audience through Purple’s larger, more diversified wholesale distribution network and growing number of company-owned showrooms. Additionally, we look forward to benefitting from the marketing prowess that has made Purple the number one online premium sleep brand and an overall market leader. We’re so pleased to align with a company that shares our vision for reinventing comfort.”
I’m Sheila Long O’Mara, executive editor at Furniture Today. Throughout my 25-year career in the home furnishings industry, I have been an editor with a number of industry publications and spent a brief stint with a public relations agency where I worked with some of the industry’s leading bedding brands. I rejoined Furniture Today in December 2020 with a focus on bedding and sleep products. It’s a homecoming for me, as I was a writer and editor with Furniture Today from 1994 until 2002. I’m happy to be back and look forward to telling the important stories impacting bedding retailers and manufacturers.
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