Vacasa Merger Battle: Who Will Buy Vacasa—Casago or Davidson Kempner?

The highly anticipated Vacasa merger seemed like a done deal when Casago announced plans to acquire Vacasa in late 2024. But recent events have complicated this narrative, with Davidson Kempner entering the picture, sparking questions like, “Who will buy Vacasa?” and “Is the Casago merger still happening?” This article breaks down the bids, backed by insights from Vacasa’s preliminary proxy statement, and explores what could come next.

Recap of the Vacasa-Casago Merger Agreement: Who Was Supposed to Buy Vacasa?

On December 30, 2024, Vacasa entered into a definitive merger agreement with Casago Holdings LLC, under which Casago would acquire all outstanding shares of Vacasa at $5.02 per share. The deal was framed as a strategic combination, with Casago planning to grow the combined vacation rental businesses and implement a franchise model for some of Vacasa’s local operations.

This agreement seemed to set the stage for a smooth transition. However, Vacasa’s January 31 preliminary proxy statement revealed important details about the sale process—namely, that Vacasa’s financial adviser, PJT Partners, had contacted 23 potential buyers, but only Casago submitted a final bid.

At the time, this limited interest suggested that Casago’s offer was the best possible deal for Vacasa. But that narrative changed on February 4, 2025, when Davidson Kempner Capital Management LP submitted an unsolicited, non-binding proposal to acquire all outstanding shares at $5.25 per share.

New Twist: Davidson Kempner’s Proposal Changes the Merger Landscape

Aspect	Casago’s Offer	Davidson Kempner’s Proposal
Offer Price	$5.02 per share	$5.25 per share
Nature of Offer	Definitive merger agreement	Unsolicited, non-binding proposal
Buyer Type	Strategic buyer (vacation rental competitor)	Financial buyer (investment firm)
Relationship with Vacasa	No prior significant relationship	Holds $30 million in senior secured notes, has 2 board members
Potential Strategy	Expand combined businesses with franchise operations	Potential asset liquidation or restructuring

Davidson Kempner’s Specialty: Distressed Securities and Turnaround Strategies

Davidson Kempner is known for its expertise in distressed securities and special situations. The firm often targets undervalued or financially challenged companies, aiming to extract value through strategic restructuring, asset liquidation, or operational turnarounds. This investment approach makes Kempner’s involvement in Vacasa significant, as it could indicate a different future compared to the strategic growth plans proposed by Casago.

Kempner’s specialty could mean anything from divesting underperforming assets to cutting operational costs to generate short-term returns. This is crucial for stakeholders to consider when evaluating what Kempner’s control over Vacasa might entail.

Why Is Davidson Kempner’s Bid Labeled “Unsolicited”?

Davidson Kempner’s role in the process is unusual. As an existing stakeholder with $30 million in senior secured notes and two board members, it had the ability to influence Vacasa’s strategy from within. As noted in the preliminary proxy statement, its two representatives even voted against the Casago merger when nine out of 11 board members approved it.

The “unsolicited” label likely has technical or legal roots—Kempner was not formally part of the sale process initiated by PJT Partners and did not submit a bid during that round of outreach. By stepping in after the Casago deal was signed but before shareholder approval, Kempner may be positioning itself as an outsider to introduce competitive pressure and potentially secure better terms.

Could This Be a Play to Reignite Buyer Interest?

Although Kempner’s bid could simply be an effort to take over Vacasa, the timing and structure suggest to us a deeper strategy. Here’s what might be happening:

1. Reigniting Interest from the 23 Parties Contacted: During the initial sale process, Vacasa received little interest beyond Casago. Kempner’s higher bid ($5.25 per share) sends a clear signal that the $5.02 offer may undervalue Vacasa’s assets. Potential buyers who passed on the initial sale might now reconsider, driven by fear of missing out on a potentially undervalued opportunity.
   
2. Forcing Casago to Respond: If Casago views Kempner’s offer as a serious threat, it may be forced to increase its bid to remain competitive. This could escalate into a bidding war that benefits Vacasa shareholders but complicates the board’s evaluation process.
   
3. Boosting Market Perception: The market’s reaction to the Kempner bid—with Vacasa’s stock trading at $5.08 as of February 4—shows that investors see potential for further gains. This could attract additional speculative interest and put more pressure on the Vacasa board to consider alternatives.

Potential Outcomes of the Battle to Buy Vacasa

• Casago Raises Its Bid: Casago may increase its offer to match or exceed Kempner’s $5.25 per share, ensuring its strategic plan for Vacasa moves forward.
• Kempner Gains Control: If the board determines that Kempner’s proposal constitutes a “Superior Proposal” under the merger agreement, the Casago deal could be terminated, and Kempner could gain control of Vacasa. This could result in a very different future for Vacasa, possibly involving asset sales, streamlined operations, or even breaking up parts of the company to unlock value.
• New Bidders Enter the Scene: The buzz generated by the competing bids could draw in one or more of the original 23 parties contacted by PJT Partners, leading to additional offers.

Board Dynamics and Potential Conflicts of Interest

The Vacasa board’s Special Committee is currently reviewing Kempner’s offer to determine if it qualifies as a superior proposal. Given Kempner’s existing financial stake and board representation, this review will likely be closely scrutinized to ensure it aligns with shareholder interests.

There is also the possibility of tension within the board. According to the preliminary proxy statement, Alan Liu and Luis Sosa, the two Kempner-appointed board members, voted against the Casago merger, expressing concerns that the sale process was insufficient and that the $5.02 per share offer undervalued Vacasa. Their opposition highlights the internal disagreement over the company’s valuation and future direction. Following their vote, both Liu and Sosa resigned from the board on January 10, 2025. 

Their exit is a key factor, as it may have removed direct Kempner influence from the ongoing board deliberations, but their presence remains through Kempner’s financial position and competing bid.

Why Vacation Rental Managers Should Care

Vacasa’s ongoing acquisition battle isn’t just boardroom drama—it carries real implications for vacation rental managers, property owners, and even competitors. Here’s why:

1. Owners currently with Vacasa may need to consider whether to stay or leave:
   • Depending on who wins control—Casago or Davidson Kempner—there could be major changes in operations. Owners will need to evaluate whether the new management structure supports their goals or if switching to a different property manager is more beneficial.
2. Competitors may try to poach Vacasa-managed properties:
   • Vacasa was once the biggest player in the industry, but its struggles have opened opportunities for competitors. If Casago completes the merger, it will need time to integrate the two companies. Competitors could exploit this period of uncertainty to lure owners away.
3. Employees absorbed by Vacasa after acquisitions may reassess their options:
   • Vacasa acquired many smaller companies over the years, absorbing their employees. If Kempner’s strategy involves significant restructuring or asset sales, former company owners and employees may consider whether to stay or reconnect with past networks.
4. People who planned to sell properties to Vacasa may face new uncertainty:
   • Vacasa was a key player for property owners looking to exit by selling their vacation rentals. If the company shifts to Kempner’s asset liquidation model, those deals may no longer be viable, leaving property owners seeking alternative buyers or strategies.

Final Thoughts: Who Will Buy Vacasa?

This acquisition battle is more than a simple case of competing bids—it’s a high-stakes game involving corporate strategy, boardroom politics, and potentially shifting market dynamics. As Vacasa’s board evaluates Kempner’s offer, shareholders and stakeholders should keep a close eye on how the situation develops.

Whether the result is an improved bid from Casago, a Kempner takeover, or a surprise new bidder, the outcome will significantly impact Vacasa’s long-term direction and the broader vacation rental market.