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Brothers Tony (left) and Terry Pearce founded Purple, and will have a stake worth an estimated $850 million in it after the merger.
Utah-based Purple will become the first publicly traded mattress startup when it completes a merger with a publicly traded investment shell company at a valuation of $1.1 billion. The deal will make Purple’s founders Tony and Terry Pearce very rich, with a stake in the new entity that Forbes estimates at $850 million.
The Pearces, Mormon brothers with 44 children and grandchildren between them, had come seemingly out of nowhere with their mattress startup since its January 2016 launch, based on technology they had invented. (See Forbes magazine profile, "Mattress Missionaries.")When Forbes visited Purple’s Alpine, Utah headquarters and its giant new factory in rural Tooele county in February, the company had just set up its second, patented Mattress Max machine that can churn out its patented purple-colored hyperelastic polymer. Revenues surged past $50 million in 2016, and are now running at a rate of $187 million (based on second quarter numbers), according to Purple’s investor presentation.
That’s still a pinprick in a $15 billion mattress industry dominated by Tempur Sealy International and Serta Simmons Bedding. But Purple and other buzzy bed-in-a-box competitors, including Casper, Tuft & Needle and Leesa have been grabbing market share as consumers got used to the idea of buying a mattress over the Internet. The Pearces believe that their stretchy, gel-like material, used in the company's mattresses as well as its seat cushions, wheelchair cushions and other comfort technology, gives the company an edge over competitors. “Our objective is to sell $2 billion out of that factory in a few years,” Tony Pearce, 61, told Forbes in February.
The Pearces had been speaking with private-equity firms and venture-capital firms for a long time, looking for investors that could put money into the company and enable its continued fast growth, but had been in no hurry to sign a deal. Neither Tony or Terry Pearce, nor Sam Bernards, the company’s CEO, would speak about the deal today.