Bidders Emerge for Bed Bath & Beyond’s Baby Banner: Report
While there’s a chance the Bed Bath & Beyond nameplate won’t survive bankruptcy, its Buybuy Baby banner is drawing investor interest.
At least two bidders have emerged with interest in the Union, N.J.-based home goods retailer’s Buybuy Baby brand in the wake of the company’s Chapter 11 case. One bidder wants to keep the baby chain in operation as a going concern and keep 75 percent, or 90 out of 120, stores open, CNBC reported. A second bidder, direct-to-consumer baby registry website Babylist, only wants the baby retailer’s trademark and domain assets, the outlet added.
More from Sourcing Journal
The digital assets of Bed Bath & Beyond—essentially its intellectual property—also could end up in the hands of a buyer, but that would guarantee that all of its 360 stores would close down.
In January, both private equity firm Sycamore Partners and brand manager Authentic Brands Group were talking with Bed Bath & Beyond in negotiations that ultimately went nowhere. But the retailer’s balance sheet was in dire straights, and smart buyers would have chosen to walk away and wait for a bankruptcy to lower the asking price.
They could still return to the table, but so could “bottom feeders” looking to buy for pennies on the dollar. If Bed Bath & Beyond can ink a “stalking horse” agreement for any of its assets, the upcoming auction could attract bidders making richer offers. The stalking horse agreement sets the baseline for bidding, and guarantees a buyer if no one else steps up.
A bankrupt company’s digital assets can be acquired for a fraction of what it would have been worth had the IP been sold before the Chapter 11 case. The same is true for distressed businesses looking for a buyer while in the midst of a liquidation. Bed Bath & Beyond began liquidating merchandise companywide in April, with the game plan of closing all stores by the end of June.
A year ago, Buybuy Baby could have gone for $630 million and $910 million. It had caught the attention of activist investor Ryan Cohen, who was pushing Bed Bath & Beyond to sell the banner or spin it off. His involvement and that of his firm RC Ventures resulted in the two being named as defendants in a securities lawsuit. That lawsuit also named as a defendant former chief financial officer Gustavo Arnal, who committed suicide last year before the legal case was paused when the company went bankrupt.
It’s not clear what Buybuy Baby is worth right now. Ankura Capital Advisors is representing the unnamed bidder, according to CNBC, and seeking a financial partner who can contribute an “additional $50 million” to shore up the offer. That could mean that the additional financing could provide the prospective buyer with some breathing room for bidding if they believe other bidders will materialize at the auction scheduled for June 16 if necessary.
