Shareholders are urged by the independent directors of Sleep Cycle to reject the open monetary bid by Velvet Cichlid
**Sleep Cycle's Board Rejects Takeover Offer as Undervaluing Company**
In a recent development, the Board of Directors of Sleep Cycle AB (publ) has publicly announced that they do not find the current takeover offer by Velvet Cichlid AB to be fair from a financial perspective for the company's shareholders.
The independent members of Sleep Cycle's Board of Directors have evaluated the offer and concluded that it does not adequately reflect the company's growth potential and fundamental value. The exact details of the offer, such as price and terms, have not been disclosed.
**Reasons for the Board's Assessment**
The Board's stance is based on several factors. Firstly, they believe that Sleep Cycle, a health-tech company specializing in sleep analysis and improvement apps, has significant growth opportunities in the rapidly expanding digital health sector. These opportunities include recurring revenue streams, global expansion possibilities, and ongoing development of AI and data-driven sleep solutions.
Secondly, the digital health and wellness industry is experiencing robust growth worldwide, with increasing consumer and investor focus on sleep technology. The Board argues that Sleep Cycle’s proprietary technology, user base, and potential for future innovation justify a higher valuation than what Velvet Cichlid is offering.
Thirdly, the Board is tasked with safeguarding minority shareholders' interests. If the offer undervalues the company, they are obliged to reject it in favor of a higher bid or continued independence. The Board’s public stance signals confidence in Sleep Cycle’s standalone growth path and a belief that shareholders would benefit more from holding their shares or waiting for a better offer.
**Valuation and Fairness Opinion**
BDO Corporate Finance, an independent financial advisor, has provided an opinion according to which the offer is not fair to Sleep Cycle's shareholders from a financial point of view. The fairness opinion is based on "going concern" and established valuation methods. BDO's opinion, as of the date of the opinion, is that the offer is not fair from a financial point of view for the shareholders of Sleep Cycle.
It's important to note that the fairness opinion does not cover relative merits compared to other alternative business opportunities or investment opportunities. The Board of Directors of Sleep Cycle AB (publ) has engaged BDO Corporate Finance to issue this fairness opinion.
As of early July 2025, the consortium, which controls the Bidder, holds approximately 68.2% of the shares in Sleep Cycle. The Bidder offers SEK 42.50 in cash for each share in Sleep Cycle. The fairness opinion is governed by Swedish law, and disputes arising from it shall be settled exclusively by Swedish courts.
**Conclusion**
While Velvet Cichlid AB’s public takeover offer for Sleep Cycle AB is a live transaction, the independent members of Sleep Cycle’s Board of Directors believe the offer undervalues the company, failing to recognize both its current worth and its growth potential in the digital health space. Their stance is typical in such situations, where boards seek to maximize shareholder value by either rejecting inadequate offers or pushing for improved terms.
The Board of Directors of Sleep Cycle, when evaluating the takeover offer from Velvet Cichlid, considered the company's growth potential in the digital health sector, the robust growth of the digital health and wellness industry, and the fair valuation of Sleep Cycle's proprietary technology, user base, and potential for future innovation. BDO Corporate Finance, an independent financial advisor, also opined that the offer was not financially fair to Sleep Cycle's shareholders. The Board, subsequently, believes the offer undervalues the company.
