Casago to acquire Vacasa through stock purchase, possibly franchise local operations

From SamWalkerOBXNews.com

Vacation property management rental companies Vacasa and Casago announced last week they will be merging later this year through a stock purchase that will take the new company private.

And more details have surfaced about Casago’s purchase of the company that manages more than 969 properties and employs 223 people on the Outer Banks.

The largest vacation rental manager in the U.S., Vacasa entered the Outer Banks market when it acquired Wyndham Vacations Rentals in 2019, which at the time owned Corolla Classic Vacations, then expanded with acquisitions of Hatteras Realty in 2020 and Outer Beaches Realty in 2021.

Multiple outlets report that Casago plans on trying to sell off some of the merged company’s local operations and then entering into franchise agreements with the new owners, according to a source. That’s in keeping with Casago’s existing franchise model.

Details about the possible locations that may be sold to franchisees were not yet known.

“Casago has always been committed to delivering personalized, locally-empowered service to homeowners, and exceptional experiences to guests. We’re excited to merge with Vacasa, a company that shares our dedication to excellence,” said Casago founder and CEO Steve Schwab. “Together, we will strengthen our ability to deliver consistent service quality on a global scale, leveraging our combined resources and expertise to better serve our homeowners, guests and partners.”

Casago manages around 5,000 vacation rentals in the U.S., Mexico, Costa Rica and elsewhere in the Caribbean.

“This merger is a natural next step in Vacasa’s journey over the past year, sharpening our focus on owners, guests, and our local teams that take care of them every day. By combining with Casago, a company that shares our vision of locally-empowered, homeowner-focused property management, we’re accelerating our progress on that path,” said Vacasa CEO Rob Greyber. “We are pairing national scale with local expertise, empowering entrepreneurial teams to set a new standard in vacation rental property management.”

Online property management platform Roofstock also plans to “invest in and provide strategic guidance to the combined company”, according to a press release announcing the merger on December 27.

“We are excited to be a part of what we believe should be the category-defining company in the vacation rental space,” said Gary Beasley, co-founder and CEO of Roofstock. “This investment is consistent with our mission of expanding beyond our historical focus on long-term single-family rentals to help power the broader residential investment ecosystem for investors large and small.”

Skift.com reports that in information provided to employees, Vacasa said both the franchise model and the “company-led model” would have a place in the combined companies.

“The franchise model allows a local operating partner (i.e., franchisee) to own their local business while getting the benefit of being associated with an international brand and using a standardized platform and technology,” Vacasa told employees.

Yahoo Finance reports Casago plans on trying to sell off some of the merged company’s local operations and then entering into franchise agreements with the new owners, according to a source, in keeping with Casago’s existing franchise model.

Under the terms of the merger agreement, Vacasa stockholders receive $5.02 per share in cash upon completion of the proposed transaction, subject to adjustment as set forth in the merger agreement, totalling around $128 million.

Vacasa has been struggling financially since it went public in a SPAC deal in late 2021, Skift.com reports.

After being valued at $4.5 billion in July 2021 before going public a few months later.

The company laid off about 1,300 workers in January 2023, including some local employees, after slashing 280 jobs in October 2022.

Skift reported Vacasa has been facing homeowner churn for the past couple of years with the 38,000 under management at the end of the third quarter representing a loss of 4,000 homes over the past year.

Vacasa notched $59 million in net income in the third quarter on $314 million in revenue, a 17% year over year drop.

The Vacasa board began exploring strategic alternatives in early 2024, Skift.com reports. A special committee recommended that the company approve the merger with Vacasa, and the board agreed and recommended that shareholders accept the agreement.

Vacasa told employees the two companies are planning their integration so it couldn’t share any information on what would happen to Vacasa executives at the time of the merger announcement.

The transaction, which is expected to be completed towards the end of the first quarter or the early part of the second quarter of 2025, is subject to certain customary closing conditions, including approval by Vacasa’s shareholders.