US: Vacation rental management platform Vacasa has confirmed that it has received an unsolicited, non-binding proposal from global investment firm and existing shareholder, Davidson Kempner Capital Management LP, to acquire 100 per cent of the company at a price of $5.25 per share.
The news comes just over a month after vacation rental property management franchise company Casago entered into a definitive merger agreement with the Portland-based firm for a reported $128.6 million.
Under the conditions of the proposed transaction, Casago would buy all of the outstanding shares of Vacasa held by public stockholders at a price of $5.02 per share [lower than in the new takeover bid], but it was subject to adjustment in the merger agreement. According to a press release, the merger agreement remains in place and the board of directors at Vacasa has not withdrawn or modified its recommendation that shareholders vote in favour of the merger with Casago.
It has now been confirmed that Vacasa will review the proposal by Davidson Kempner Capital Management LP in consultation with its outside legal counsel and financial adviser to evaluate it and carry out due diligence. It will then be determined whether the new bid can be considered a ‘superior proposal’ as defined in the merger agreement.
PJT Partners is serving as financial adviser and Vinson & Elkins LLP is acting as legal adviser to Vacasa’s special committee of the board, while Latham & Watkins LLP is acting as legal adviser to Vacasa.
In a preliminary proxy filed by Vacasa on 31 January, it was revealed that out of 23 parties contacted by Vacasa’s financial advisers during the sale process, only Casago submitted a final bid. That bid was accepted by nine out of Vacasa’s 11 board directors, while the other two directors, who had been appointed by existing shareholder Davidson Kempner Capital Management LP, voted against the proposed transaction.
Founded in 2001, Casago currently manages almost 5,000 properties in 72 cities across the United States, Mexico, Costa Rica and the Caribbean, while Vacasa’s portfolio stands at just over 36,000 homes in the United States, Belize, Canada, Costa Rica and Mexico as per latest figures.
Together, Casago and Vacasa said that their proposed merger would create an “unmatched vacation rental management platform, pairing the advantages of an international brand with the personalised care of local management”, with Casago on course to become the third largest shareholder of Vacasa after TRT Holdings and Miramar Holdings. They also pledged to “improve service levels, marketing to new homeowners and increase partnerships with local teams, including through franchising”.
2024 was a challenging year for Vacasa, which included two significant rounds of layoffs and a $30 million initial senior secured convertible notes financing in August [with the option for an additional $45 million] to aid its restructuring efforts.
In its Q2 financial results, the company also reported an 18 per cent year-over-year drop in revenue to $249 million, a net loss which more than doubled to $13 million, and a 19 per cent dip in quarterly gross booking value driven by a 17 per cent decrease in nights sold.
After going public on the Nasdaq Global Select Market in December 2021 via a merger with special purpose acquisition company [SPAC] TPG Pace Solutions, Vacasa’s share price has since plummeted by more than 97 per cent to $5.32 at the time of writing. Should the Casago-Vacasa merger still go ahead, Vacasa would no longer list on the Nasdaq and the combined company would become a privately held company.
