A New York acquisition company is buying "bed in a box" manufacturer Purple Innovation LLC in a deal that values the new but rapidly growing Utah company at $1.1 billion.
Global Partner Acquisition Corp., a publicly traded company, anticipates putting up $90 million in cash that will go to Purple's current owners, with the rest of the purchase price provided by equity in the new public company they plan to create, the two companies said Thursday.
Purple Innovation, based in Alpine with manufacturing plants there and in Grantsville, uses patented technologies to produce mattresses, cushions, pillows and other products made from a "hyper-elastic polymer" that provides lightweight support while dissipating heat.
The Utah company was founded last year with help from a Kickstarter campaign and experienced a 271 percent growth rate from 2016 to the first half of this year, with $187 million in net revenue, the New York company said in a regulatory filing.
Purple was founded by brothers Terry and Tony Pearce, who under the deal will remain majority shareholders in the new public company, with Sam Bernards staying on as CEO. The company has 562 employees in Utah.
The companies said they had a nonbinding letter of intent and that closing the deal would mean entering into a definitive agreement, completing due diligence investigations and obtaining approval by Global Partner Acquisition shareholders. GPAC shares rose about 1 percent to $10.05 by the close of trading Thursday.
The Pearces are engineers who had previously worked on developing cushions for companies such as Johnson & Johnson, JanSport and Nike, according to a presentation for shareholders filed with the Securities and Exchange Commission.
"We believe Purple is uniquely positioned in the market and this transaction will allow us to better take advantage of our large market opportunity and continue our rapid, profitable growth," Terry Pearce said in a news release.
In the early 1990s, the Pearces created Floam, a lightweight cushioning fluid used in making wheelchair cushions, medical beds, footwear, ankle and knee braces and straps for golf bags.
They went on to create "hyper-elastic polymer," which was licensed to other companies to make mattresses, backpack straps, shoe insoles, pillows and other products. They also created and patented a machine to make large mattresses out of the polymer.
Purple's manufacturing of its own products using patented equipment and design give it a competitive advantage over other mattress and cushion makers, the companies said.
Global Partner CEO Paul Zepf said Purple is in a position "to disrupt multiple massive industries that are ripe for innovation."
Purple has focused on selling "bed in a box" products online, and is now one of four leading companies competing in that niche in the U.S., according to court documents.
The company has sued competitor GhostBed Inc., of Plantation, Fla., over what it says were "false and misleading statements" about the health effects of its products. Purple's suit also names marketing services provider Ryan Monahan, also of Plantation, and his website, honestmattressreviews.com.
In one set of posts, honestmattressreview.com questioned the safety of a white powder found on Purple's products and implied it could cause cancer. The powder is nontoxic and used to keep its products from sticking to themselves, Purple said in its lawsuit, filed in February in federal court in Salt Lake City.
On Tuesday, U.S. District Judge Dee Benson declined to dismiss the lawsuit, ruling it was properly filed in Utah, though he did toss one of eight claims.