The quest to acquire one of Bed Bath & Beyond’s (OTCMKTS:BBBYQ) last remaining valuable assets may finally be over. Last week brought reports that a little-known company had tentatively acquired the rights to Buy Buy Baby. Based in Piscataway, New Jersey, Dream On Me deals primarily in baby-themed accessories, such as cribs, strollers, and play yards. According to court records filed on Friday, June 30, it won a tentative auction for the company’s intellectual property (IP) two days prior for the price of $15.5 million. This includes not only the Buy Buy Baby IP address but also its business data and mobile platform.
BBBYQ stock is rising today, but that doesn’t mean the stock is a good buy. On the contrary, this may be one of the last opportunities investors have to offload shares while they are still in the green.
Will this acquisition be a good buy for both parties involved? While it certainly makes sense for Dream on Me, Bed Bath & Beyond is beyond the point of saving. Let’s take a closer look at this pending deal.
What’s Happening With BBBYQ Stock
News of tentative acquisition has pushed BBBYQ stock into the green today, though not by much. As of this writing, it is up 2.5% for the day, though its current trajectory suggests that it is already running out of momentum. Just a few days ago, InvestorPlace‘s Shrey Dua raised the question of if Bed Bath & Beyond would even be able to offload Buy Buy Baby as shares trended downward. Now we know that the answer to that question is presumably yes. However, that doesn’t mean the parent company has anything left to offer investors.
Dream on Me’s recent auction win is only tentative. There is still another auction coming up, and if Bed Bath & Beyond receives a better offer, it will be well within its rights to accept it. That doesn’t mean another buyer will emerge and offer more money. No matter how valuable Buy Buy Baby may be, it doesn’t change the fact that Bed Bath & Beyond is a highly troubled company that has spent the year in steep decline. Once a leading home furnishing retailer, it has proven unable to adapt to the modern economy, declaring bankruptcy and delisting from the Nasdaq this year. Those are only some of the reasons why any asset linked to the failed company would be a tough sell. As NBC News reports:
“Earlier this month, an unknown bidder who was interested in keeping 75% of Buy Buy Baby’s stores open was seeking an additional $50 million in capital to shore up its proposal, CNBC previously reported. It’s not immediately clear if that bidder is still in the race, but the figure offered insight into how much bidders would need to purchase the entire Buy Buy Baby business and keep it running as a going concern.”
What It Means
Ultimately, the only thing that has kept Bed Bath & Beyond in focus is its following among retail investors. The r/WallStreetBets crowd is refusing to abandon the ship, no matter how quickly it is sinking. According to the Financial Times, investors have poured roughly $200 million into it since the company went bankrupt, choosing to ignore the fact that the shares are technically worthless. The lesson that everyone should take from this is quite simple: This troubled company cannot be saved.
It won’t matter if it receives a better offer than Dream on Me’s. BBBYQ stock has dropped 86% in the past six months for a reason. No outside offers and no amount of short-squeeze speculation can make this losing company a winner.
On the date of publication, Samuel O’Brient did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
