Which 5 Companies Could Buy Bed Bath & Beyond?

With the news of the blockbuster deal between Kroger and Albertsons in the grocery space, it immediately creates speculation about other potential retail acquisitions and perhaps no company is more of a candidate than Bed Bath & Beyond.

With a whole range of well-documented troubles – not the least of which is a serious cash flow problem that is draining its checkbook rapidly – BBB could be a great pick-up for a buyer looking to take over what is still a highly regarded and geographically well-situated retailer.

It would be a pretty cheap buy too. Bed Bath’s market cap as of Friday Oct. 14 is just barely $400 million and even if a buyer were to pay a two-times premium they could do the deal for well under $1 billion. That’s pretty much chump change when it comes to the M&A business these days.

BBB also has a pretty diversified base of shareholders with no single entity believed to hold more than 10%. It also has not announced any poison pills or other blocks to potential acquirers and one has to think management and current shareholders would actually be relieved to let somebody else deal with this mess.

So, who are the most likely buyers for Bed Bath? Here’s some educated speculation – with the clear caveat that none of these companies have expressed a single iota of interest in BBB and the company itself does not appear to be actively shopping itself. But, that’s why they call it speculation, right?

1. Home Depot or Lowe’s: Each of these Big Box DIY chains is starting to max out on its core home improvement business and both have been actively trying to expand their home furnishings and décor sales. What better way to do that than with the what is still arguably the big player in this retail space? But please note neither of these giants has done much in the acquisition space and Depot may still be licking its decorating wounds from its long-departed Expo division failure.
2. Wayfair: If there’s a big “Duh” in the room now, you’re probably not alone. What easier – way for the big online retailer to satisfy its need for physical retail than by buying BBB…and getting BuyBuyBaby in the process. Plus, Wayfair’s expertise in e-commerce would be a huge asset for Bed Bath’s sub-par efforts online. And the price tag is pretty reasonable for a start-up that still seems to have little trouble raising cash.
3. A Real Estate Developer like Kimco: Shopping property owners like Brookfield and Simon have gotten into the retail business buying up troubled chains to keep their malls full. The same thing could happen with BBB, whose stores are primarily in strip centers rather than regional enclosed malls. That’s why somebody like Kimco could be a logical buyer, especially now before BBB closes any more stores.
4. Private Equity Investors: Some of these guys already have pretty decent stakes in Bed Bath, so this wouldn’t be a stretch at all. PE money continues to chase the retail sector and this one would be a rounding error for some of these guys. Frankly, they could close all the Bed Bath & Beyond stores and just focus on Baby and still get their money out of this thing. It’s been known to happen.
5. The Prodigal Sons Return: One more theory, this one is pretty out there, but hey, what the hell. Could the founders of BBB, Warren Eisenberg and Len Feinstein, decide they want to rescue their once-proud operation, and since they are not exactly kids anymore, bring back former CEO Steve Temares and former president Art Stark to do the heavy lifting? It’s a wild idea but you have to think all four of these guys would love another shot to be able to redeem their reputations.

Again, all of this is pure speculation and BBB could end up with an entirely different future, good or bad. But deals in retailing usually begat deals and this one would be absolutely, positively fascinating to see, wouldn’t it?

No coupons necessary either.