Signs saying everything is for sale at a Buy Buy Baby store in the Brooklyn borough of New York, February 6, 2023.
Stephanie Keet | Bloomberg | Getty Images
Buy Buy Baby stores are on the verge of disappearing after a last-ditch effort to save the chain and keep the company alive fell apart, CNBC has learned.
Brand management company Go Global Retail, owner of children’s clothing company Janie and Jack, was eager to buy the beloved Bed bath & beyond chain and keep it going, but ultimately couldn’t agree on the valuation, the company’s CEO Jeff Streader told CNBC.
Lender Sixth Street Partners, Bed Bath & Beyond’s main creditor, determined that it could recover more of its losses than what Go Global was willing to offer by selling Buy Buy Baby’s intellectual property, auctioning its leases and proceed with liquidation sales.
Dream on Me Industries, a little-known New Jersey 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 higher bids.
Go Global believed there wasn’t a path to closing until Monday, but it ultimately couldn’t agree on a number with Sixth Street, Streader said.
“We were fair in our offer. Sixth Street was not unreasonable, but there was a difference of opinion on the valuation,” he said. “We wish the winners of the IP bid the best of luck on their journey.”
Go Global’s bid would have been higher than Dream on Me’s, but not by much because “there’s been a massive erosion of value over the past six weeks,” said a person close to the matter, speaking on condition of anonymity because they were not authorized to discuss the matter publicly.
When the auction process first started, Go Global was willing to offer a “significantly higher” price, the source said. In May, the company was seeking an additional $50 million in capital to support its bid, CNBC previously reported.
However, nearly three months after the liquidation sale at Buy Buy Baby’s 120 stores, there was very little left to bid for besides the IP, empty stores, leases and whatever inventory, the source said.
In recent weeks, Bed Bath & Beyond has repeatedly pushed back and split up the bankruptcy-led auction process for Buy Buy Baby so it could bring in higher bids and find a company willing to keep stores afloat.
However, each time the auction was postponed, it was only delayed by about a week, which “certainly scared off potential bidders or investors,” the source said.
“Most people can’t move that fast,” the source added.
During a hearing in federal bankruptcy court in Newark, New Jersey, Judge Vincent Papalia approved the sale of Buy Buy Baby’s intellectual property to Dream on Me on Tuesday when one of the bidder’s staff, who appeared virtually via Zoom for the hearing , was seen smoking a cigarette on screen.
Bed Bath & Beyond’s lawyers said it was “unfortunate” that they could not find a buyer, as Papalia and other lawyers present at the hearing expressed disappointment that the necklace could not be saved.
“I share the disappointment about the lack of pending bids,” said Papalia.
“It’s a pity, I think both parts are canceled and that’s disappointing. I had higher expectations, but sometimes those expectations are not met.”