Topline
Brick-and-mortar retailer Bed Bath & Beyond announced Friday it has reached an agreement with activist investor Ryan Cohen to expand its board and explore a sale of its baby-focused business after the 36-year-old billionaire took a nearly 10% stake in the firm this month and blasted company management for the firm’s ailing business—fueling a surge in shares akin to one that followed Cohen’s similar effort at GameStop.
Three veteran directors with restructuring experience—all tapped by online pets-supplies store Chewy … [+]
Key Facts
In a Friday morning release, Bed Bath & Beyond said three directors designated by Cohen’s investment firm RC Ventures would join the firm’s board immediately and will stand for election at its annual shareholder meeting later this year; the board will temporarily expand to 14 members until 11 members are elected at the shareholder meeting.
All veteran directors with restructuring experience, the chosen members include Marjorie Bowen, former director at student-loan servicer Navient and retailer Talbots; Shelly Lombard, who’s served as director of a special-purpose acquisition company and financial services firm Innovate; and investment banker Ben Rosenzweig, a partner at Atlanta-based Privet Fund Management.
Bed Bath & Beyond said it would also form a four-person committee, including two RC Ventures appointees, to explore “alternatives to unlock greater value” from the company’s Buy Buy Baby brand after Cohen’s note earlier this month insisting the company evaluate a full sale of the brand to a well-capitalized acquirer.
In statements on Friday, Bed Bath & Beyond Chair Harriet Edelman said the firm was “highly committed to fundamentally reshaping” its business, while Cohen praised the resolution as a “positive outcome” for shareholders and the company board for “promptly embrac[ing]” his ideas.
The agreement comes less than two weeks after Cohen sent the firm a letter in which he disclosed a 9.8% stake (becoming one of Bed Bath & Beyond’s top five shareholders), blasted management for “disappointing shareholder returns and perpetual underperformance” over the past ten years and laid out suggestions to help spur stock growth.
Shares of Bed Bath & Beyond—another highly shorted stock caught up in last year’s retail-fueled meme-stock mania—surged as much as 8% in pre-market trading Friday; they’re up more than 45% since Cohen disclosed his investment, but are still down about 40% over the past five years.
Surprising Fact
Bed Bath & Beyond stock skyrocketed as much as 110% after Cohen’s letter was disclosed on March 7.
Key Background
Last January, Reddit traders declared GameStop their meme stock of choice as they bought up Wall Street’s most heavily shorted companies. Like Bed Bath & Beyond, GameStop was among the worst hit of brick-and-mortar retailers over the past decade, as independent companies like Minecraft gobbled up market share, but its shares began to surge at the tail end of 2020, when Cohen started buying up shares at about $6 and blasting management for “lack[ing] the mindset, resources and plan needed to [help GameStop] become a dominant sector player.” Cohen was tapped as the firm’s chair in April and has since led the firm’s plans to launch a marketplace for the buzzy blockchain-based collectibles known as non-fungible tokens. GameStop posted a worse-than-expected fourth-quarter loss of $147.5 million last week, compared to a profit of $80.5 million in the period one year prior.
Big Number
$119.4 million. That’s how much Cohen’s investment firm, RC Ventures, has spent this year to purchase nearly 7.8 million Bed Bath & Beyond shares—worth about $172 million—since January 13, according to a regulatory filing.
Further Reading
GameStop Stock Skyrockets After Billionaire Ryan Cohen Buys Another $10 Million In Shares (Forbes)
Source: https://www.forbes.com/sites/jonathanponciano/2022/03/25/bed-bath-beyond-bbby-stock-agreement-gamestop-billionaire-ryan-cohen/