There’s a good reason to explain why shares of Bed Bath and Beyond were soaring 10% on Friday.
According to a report, the retailer has received takeover interest for its BuyBuy baby business.
A WSJ report has revealed that suitors for the unit include Cerberus Capital and Tailwind Acquisition (NYSE:TWND) a SPAC chaired by Casper Sleep’s former CEO Philip Krim. Details of any bid couldn’t be learned.
CNBC had reported in March that the buybuy BABY business was said to be seeing strategic and private equity interest.
Bed Bath also announced last month that it reached an agreement with Gamestop Chairman Ryan Cohen to add three independent directors to the the retailer’s board.
Cohen’s RC Ventures disclosed a 9.8% stake in Bed Bath & Beyond in early March and had argued that the buybuy BABY could be worth several billions dollars as a separate company.
BBBY could use a full or partial sale of buybuy BABY to pay off debt, put cash on the balance sheet and continue reducing its share count.
The home goods retailer reported a holiday-quarter loss earlier this month and spoke of struggles with low inventory and congested ports. The company also warned that consumer demand is slowing.
CEO Mark Tritton said out-of-stock merchandise caused the company to miss out on about $175 million in fiscal fourth-quarter sales. That’s higher than the prior quarter, when supply chain bottlenecks cost them about $100 million.
Tritton said in a CNBC interview that the company is disappointed by its results. He said “major headwinds in the macro environment” have slowed the company’s turnaround efforts.
Chief Financial Officer Gustavo Arnal said challenges have continued in the first quarter. He said consumers feel growing uncertainty, which is leading to a pullback in demand.
For the three-month period ended Feb. 26, the company reported a loss per share of 92 cents. This is compared with what analysts were anticipating, based on Refinitiv data, of a profit of 3 cents. Revenue at $2.05 billion was also below the $2.07 billion expected.
Disclaimer: We have no position in any of the companies mentioned and have not been compensated for this article.