Buy Buy Baby stores set to shutter as Go Global's deal to save chain falls apart at eleventh hour
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Buy Buy Baby's stores are set to disappear after a last ditch effort to save the chain and keep the business alive fell apart, CNBC has learned.
Brand management firm Go Global Retail, which owns children's apparel company Janie and Jack, was eager to buy the beloved Bed Bath & Beyond chain and keep it running, but ultimately couldn't reach an agreement on valuation, the firm's CEO Jeff Streader told CNBC.
Lender Sixth Street Partners, Bed Bath & Beyond's lead creditor, determined it could recover more of its losses than what Go Global was willing to offer by selling Buy Buy Baby's intellectual property, auctioning off its leases and moving ahead with liquidation sales.
Dream on Me Industries, a little-known New Jersey-based retailer and one of Buy Buy Baby's former suppliers, won the chain's trademark and digital assets for $15.5 million after Bed Bath & Beyond failed to receive any higher bids.
Go Global believed there was a path to close as recently as Monday, but in the end, it couldn't agree on a number with Sixth Street, Streader said.
"We were being fair in our offer. Sixth Street was not unreasonable but there was a difference in opinion on valuation," he said. "We wish the IP bid winners success in their journey."
In total, Go Global's offer had a higher dollar amount than Dream on Me's, but not by much because "there was a huge erosion of value in the last six weeks," according to a person close to the matter, who spoke on the condition of anonymity because they were not authorized to discuss the matter publicly.
If the firm's offer was accepted, it would've needed to put up additional capital at the time of the sale to keep stores running and the way its bid was constructed didn't factor in the cost of Buy Buy Baby's intellectual property, said another person close to the matter. While Sixth Street would've preferred to keep stores open, Bed Bath didn't receive a viable bid to allow that, said the person.
When the auction process first began, Go Global was prepared to offer a "substantially higher" price, said one of the people. In May, the firm was seeking an additional $50 million in capital to shore up its bid, CNBC previously reported.
However, nearly three months into liquidation sales at Buy Buy Baby's 120 stores, there was very little left to bid on besides its IP, empty stores, leases and whatever inventory was left, said the source.
For the past several weeks, Bed Bath & Beyond has repeatedly pushed back and split up the bankruptcy-run auction process for Buy Buy Baby so it could secure higher bids and find a firm that was willing to keep stores running.
However, each time the auction was pushed back, it was only delayed by about a week or so, which "definitely deterred prospective bidders or investors," said the source.
"Most people cannot move that quickly," the source added.
During a hearing in federal bankruptcy court in Newark, New Jersey, on Tuesday, Judge Vincent Papalia approved the sale of Buy Buy Baby's intellectual property to Dream on Me as one of the bidder's staffers, who appeared virtually via Zoom for the hearing, was seen smoking a cigarette on screen.
Bed Bath & Beyond's lawyers said it was "unfortunate" they weren't able to secure a buyer as Papalia and other attorneys present for the hearing expressed their disappointment that the chain couldn't be saved.
"I share in the disappointment for the lack of going concern bids," said Papalia.
"It's a shame, I guess both parts are not going forward and that is disappointing. I had higher hopes going in but sometimes, those hopes aren't realized."
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