Bed Bath and Beyond's Baby Gear Retailer Attracts Bidders

That bye-bye may be a little bit premature, baby.

Buy Buy Baby, the baby gear retailer is drawing interest from at least two bidders as its parent company, Bed Bath & Beyond, works to auction off its assets and keep some form of its business alive, according to CNBC.

DON'T MISS: Why Shorting Bed Bath & Beyond Stock (BBBYQ) May Be a Bad Idea Right Now

The interested parties include an unknown bidder, who would purchase the banner as a going concern and keep about 75% of stores open, and Babylist, a direct-to-consumer baby registry website that wants to buy its trademark and domain.

Babylist describes itself as “the leading vertical marketplace and commerce destination for baby, driving purchase decisions for more than 9 million people each year.” 

The Babylist Flagship Showroom, which will encompass 18,000 square feet, is slated to open this summer in Beverly Hills, California.

Bidder 'an Independent Operator'

Ankura Capital Advisors, an investment banking firm, is advising the unnamed bidder and CNBC cited a May 16 email to its distribution list that said the party is seeking a financial partner “to help lead the purchase of Buybuy Baby out of the BBBY bankruptcy.”

The client was seeking an additional $50 million in capital alongside its current financial sponsor to support a stalking horse bid on the asset.

 A stalking horse bid is an offer on the assets of a bankrupt company that, if accepted, sets a price floor for future bids.

The bidder was described as an “independent operator with several successful, complimentary retail chains in their portfolio.”

Ankura noted that Buy Buy Baby had about $90 million in inventory at the time of the bankruptcy filing and had been liquidating about $7.5 million weekly at the time the message was sent.

Last year activist investor Ryan Cohen, co-founder of Chewy  (CHWY) - Get Free Report and chair of GameStop  (GME) - Get Free Report, pointed to the baby gear banner as one of the most valuable pieces of the company, arguing it could be worth several billion dollars.

"Given that BABY is estimated to reach $1.5 billion in sales in Fiscal Year 2023 with a double-digit growth profile and at least 50% digital penetration, we believe it is likely much more valuable than the Company’s entire market capitalization today," he said in a March 2022 letter.

Bankruptcy Filing

Cohen bought a sizable chunk of Bed Bath and Beyond but later sold off his shares.

It doesn’t currently appear as if there’s any interest in buying the Bed Bath banner and keeping its stores open, but some bidders are interested in buying its digital assets.

In its most recent quarterly securities filing, Bed Bath & Beyond noted the intangible value of trade names and trademarks was just $13.4 million. 

The company had about $4.4 billion in assets and $5.2 billion in debts as of late November, court filings show.

Bed Bath & Beyond filed for bankruptcy in April after a dramatic decline in its business over the past decade.

The company informed its shareholders that it would begin shutting down the company, which would include the closure of its 360 remaining Bed Bath & Beyond stores and 122 Buy Buy Baby stores.

Bed Bath & Beyond's shares were delisted from the Nasdaq exchange. They are now available only through the over-the-counter (OTC) markets. The letter "Q" (standing for "quotation") was appended to the end of the old "BBBY" ticker.

A so-called "meme stock," the company became the target of short squeezes early this year, thanks to retail investors on Reddit who caused spikes of more than 100%.

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