There may be an aftermath to Bed Bath & Beyond after all. Or at least some kind of retail sanitizer.
The home goods retailer, which filed for bankruptcy in April, is reportedly negotiating Buybuy Baby series sale to Go Global Retail and its trademark intellectual property rights to Overstock.com.
The potential sales will be the latest in a swarm of deals this year as buyers select the corpses of retailers whose individual assets — leases, inventory and brands — appear to be worth more than the companies themselves. It is likely that we will see more deals in light Difficult conditions faced by retailers and the emergence of private equity players looking to buy well-known brands on the cheap and turn them into big returns.
Private equity sniffing retail brands
For example, in May Authentic Brands Group, which previously owned mall clothing retailers like Forever 21 and Nine West, bought the intellectual property of clothing chain Vince.
B. Riley Financial and private equity firms Irradiant Partners, along with a group of retail executives, bought the parent company of The Vitamin Shoppe and Pet Supplies Plus in a $2.6 billion debt deal. And Solo Brands bought TerraFlames, which sells fire pits, fire bowls and an indoor portable s’mores toaster — for an undisclosed amount.
Go Global Retail, the private equity-backed company that wants to buy Buybuy Baby, has bought the Janie and Jack children’s clothing chain from The Gap Inc. (GPS) – Get a free reportin 2021.
And WHP Global, which is trying to revitalize Toys R Us, recently partnered with Express Inc. Buy bonobo from Walmart Stores Inc. (wmt) – Get a free report$75 million. WHP Global announced last March that it had received a $375 million investment from Ares Management Group to pursue deals.
Retailers themselves often profit from the demise of their peers. Five Build Inc. said earlier this week that it took over nearly 20 leases from a bankrupt home goods retailer on Tuesday. As a result, the extreme value chain, which targets tweens and teens, said it would exceed its goal of opening 200 new stores by the end of the year.
More deals to come
After a deal drought due to the pandemic, the retail M&A market is likely to heat up this year, according to advisory firm Bain & Company.
“Retailers that generate huge total returns for shareholders are getting two things right: They engage in frequent, physical M&A and are taking advantage of the economic downturn to make bold M&A moves,” said the Bain report.
“Indeed, in the latter half of 2022, we started to see early signs of a return to deals on a large scale. Companies are starting to rely on record levels of liquidity raised during the COVID-19 pandemic and low contract multiples — lower than in any other major industry,” Indeed – to pursue great deals.