Vacasa-Casago Merger Saga Continues: Davidson Kempner Slams Special Committee in New Letter

In case you missed it: Vacasa agreed in December 2024 to a deal that would take the company private, merging with Casago in a $5.30-per-share offer. Since then, hedge fund Davidson Kempner—a Vacasa shareholder and creditor—has pushed back hard, submitting a higher bid and arguing the board isn’t giving it a fair shot.

In our previous article, we broke down Davidson Kempner’s arguments and what makes the Casago deal complex. Now, the hedge fund has escalated its concerns with a new letter aimed squarely at Vacasa’s Special Committee, the group tasked with running the sale process.

Here’s what’s new—and what it means for stakeholders watching from inside and outside the company.

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What’s Happened Now: A Letter That Pulls No Punches

On April 16, Davidson Kempner submitted a new letter to Vacasa’s Special Committee. Below is a summary of the hedge fund’s position, based solely on their own statements:

According to Davidson Kempner:

• The Special Committee has shown a “pattern of behavior [that] does not reflect good faith engagement,” including what they describe as delays in communication and a tight deadline (less than 48 hours) for Davidson Kempner to respond to complex demands.
  
• The process has imposed “unreasonable demands” that have made it “practically impossible for any competing bid to succeed.”
  
• The Special Committee has “continued to hide behind” a limited waiver in the Tax Receivable Agreement (TRA) that only applies to the Casago transaction, which Davidson Kempner believes gives insiders—referred to as the “Rolling Stockholders”—a significant advantage.
  
• Despite submitting six revised proposals, including an offer of $5.83 per share and additional liquidity support, Davidson Kempner says the Special Committee has failed to engage meaningfully and instead applied stricter terms to them than to Casago.
  

The hedge fund argues that these actions have prevented its offer from being evaluated fairly and that the process has favored a lower-priced deal backed by insiders.

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What Is Davidson Kempner So Upset About?

The letter outlines several key issues:

1. Timing and Responsiveness

Davidson Kempner says it waited three weeks for permission to move forward while being asked to respond to new demands within 48 hours—suggesting a one-sided negotiation process.

2. The TRA Waiver Issue

At the heart of the dispute is a complex agreement called the Tax Receivable Agreement (TRA). It promises payouts to early investors if Vacasa is sold. But only Casago’s deal includes a waiver of those payouts, giving it a built-in advantage. DK argues this is a structural block to any better offer and wants the waiver to apply to all potential buyers—not just Casago.

Simply put: The way the current agreement is set up makes other offers more expensive by default.

3. Unequal Demands

Davidson Kempner says it has agreed to everything from:

• A $20 million liquidity injection
  
• A $15 million penalty if it fails to close the deal
  
• Extra penalties if the deal gets delayed
  

But it claims the Committee has still demanded additional “off-market” terms—like giving up its entire creditor position or accepting full legal responsibility for even minor breaches. None of these, DK points out, were asked of Casago.

4. Concerns About Fair Process

DK believes Vacasa’s insiders—who own about 46% of the voting stock—are working too closely with the Special Committee. They’re calling for a majority-of-the-minority vote, which would ensure that only non-insiders get to decide whether the Casago deal goes through.

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What This Means for Property Managers, Staff, and the Industry

Whether or not you have a stake in Vacasa, this battle says a lot about how consolidation and ownership transitions are playing out in the short-term rental industry.

For Vacasa’s Property Managers and Employees:

• Uncertainty continues. If this process drags on or gets challenged legally, there could be delays in closing the deal and clarifying the future direction of the company.
  
• Leadership direction may shift. A Casago-owned Vacasa could operate differently from one influenced by Davidson Kempner. Both paths likely mean change—but of different kinds.

For Other Industry Players:

• Governance is under the spotlight. Davidson Kempner’s challenge shows how complex ownership structures and sale processes can invite scrutiny. It’s a reminder that major transitions often raise tough questions—regardless of which side you’re on.
  
• Private equity interest is still strong. Both bids show that investors still believe in Vacasa’s long-term potential. That’s a sign of confidence in short-term rentals at scale, even if Vacasa’s own stock has struggled.

For Smaller Operators Watching the Big Players:

• This isn’t just corporate drama. These deal structures and shareholder dynamics affect who sets the tone for the industry—whether it’s insiders shaping companies behind closed doors or external stakeholders holding them accountable.
  

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A Final Word

Davidson Kempner’s latest letter raises concerns—but also serves its own agenda as both an investor and creditor. The Special Committee’s job is to protect all shareholders, but whether it has done so transparently is now under scrutiny.

We’ll continue to track the developments. If you want a deeper breakdown of the original dispute, read our full analysis here.