Vacasa Defends Casago Deal Amid Davidson Kempner's Revised Bid: A Battle of Terms and Trust

Vacasa, Inc. (NASDAQ: VACA) has entered a high-stakes corporate confrontation after rejecting Davidson Kempner Capital Management’s revised $5.83-per-share takeover proposal. The decision underscores a clash between two competing visions: a riskier but financially sweeter bid from activist investors versus a safer, structurally simpler merger with Casago. Here’s why Vacasa’s Special Committee chose stability over a higher price—and what investors should consider before the critical shareholder vote looming in late April.

The Rejection: Why $5.83 Isn’t Enough

The Special Committee’s unanimous rejection of Davidson Kempner’s offer hinges on three pillars of skepticism:
1. Tax Receivable Agreement (TRA) Logjam: Davidson’s proposal remains contingent on amending the TRA to waive $50 million in payments to early investors—a condition the Special Committee deems unachievable. Unlike Casago’s deal, which already secured this waiver, Davidson has not secured sufficient commitments from TRA beneficiaries to proceed.
2. Deal Uncertainty: Davidson refused to accept critical risk-mitigation terms demanded by the Special Committee, such as surrendering creditor status if the deal collapses, assuming “hell or high water” obligations for antitrust approvals, and eliminating clauses that could delay closure due to a “material adverse effect.” These rejections, Vacasa argues, create fatal uncertainties.
3. Asymmetric Risk: As a creditor, Davidson holds a structural advantage in bankruptcy scenarios. Public shareholders could lose more if the deal fails, while Davidson’s creditor status might prioritize its claims—a risk the Special Committee calls “unacceptable.”

The Casago Advantage: Certainty Over Price

While Davidson’s $5.83 bid exceeds Casago’s $5.30 per share, the Special Committee emphasizes that Casago’s terms offer unmatched stability. Key differentiators include:
- Fixed Price and Liquidity: The Casago deal, amended in March 2025, removes downward price adjustments tied to Vacasa’s liquidity or property management metrics. This ensures shareholders receive the full $5.30 regardless of market volatility.
- TRA Waiver: Casago’s agreement eliminates a $50 million change-of-control payment to TRA beneficiaries, a benefit Davidson’s proposal lacks.
- Closing Timeline: With the shareholder vote scheduled for April 29, Casago’s path to closing by mid-2025 appears far clearer. Davidson’s proposal, by contrast, faces unresolved TRA issues and regulatory hurdles.

Financial Realities: Why Vacasa Needs Closure

Vacasa’s financial health adds urgency to the decision. Despite a stock surge of 111% to $5.39 over six months, the company reported a negative EBITDA of $10.7 million and a liquidity ratio of 0.77—a red flag signaling cash flow struggles. A failed merger could exacerbate these challenges, making the Casago deal’s fixed terms and TRA waiver critical to survival.

The Davidson Critique: A Fair Process?

Davidson Kempner’s April 16 letter accuses the Special Committee of “bad faith” for imposing unreasonable deadlines (e.g., 48-hour responses) and favoring Casago. The firm also demands a “majority-of-the-minority” vote to ensure non-insiders can block the deal—a move Vacasa’s board opposes as unnecessary.

Conclusion: Trust in Structure Over Price

Vacasa’s Special Committee has chosen a path prioritizing fiduciary duty over short-term gains. The $5.83 offer may sting for shareholders, but the risks tied to Davidson’s proposal—including unresolved TRA issues, creditor asymmetry, and regulatory hurdles—far outweigh the 9.4% premium. With the Casago deal offering a $5.30 floor, fixed terms, and a $50 million TRA savings, the board’s rationale holds water.

Investors should note that Vacasa’s stock already trades near the Casago price, suggesting the market has largely priced in this outcome. A shareholder vote on April 29 will likely approve the Casago merger, given the Special Committee’s strong recommendation and the lack of credible alternatives. For now, stability—not a higher bid—seems to be winning the day.

In a sector where liquidity and execution matter more than headline numbers, Vacasa’s decision reflects a pragmatic calculus: closing a deal is better than chasing one that might never materialize.