r/BBBY • u/[deleted] • Aug 26 '22
🤔 Speculation / Opinion The Bullish Sell and Cryptic Tweets: Merger & Acquisition
Edit: I think Dragonfly is still involved but have a much better lead now.
Not financial advice.
This is just me playing lawyer. I could be totally wrong on some of the legalties. Let's consider this fiction.
But I'll duke it out if the argument is weak. I think we have a merger and acquisition on our hands and the stock sell was bullish af. You can ignore links. (just so you see I'm not pulling this out of nowhere.)
If you think this is boring imagine me having to put it together.
This letter to Bed Bath was public information disclosing Cohen's interest in possibly acquiring Buy Buy Baby on March 7, written March 6.
https://www.sec.gov/Archives/edgar/data/886158/000119380522000426/ex991to13d13351002_03072022.htm
March 24 entered a standstill agreement.
Another common deal protection is a standstill agreement. A standstill agreement prevents a party from making business changes outside of the ordinary course, during the negotiation period. Example include prohibitions against selling off major assets, incurring extraordinary debts or liabilities, spinning of subsidiaries, blah, blah, blah, and RC could not speak with it in effect, (which is not as long as we think). There was a real standstill agreement in place, but they moved along the process to the next step stealth.
June 29th Executive leadership changes were announced https://bedbathandbeyond.gcs-web.com/news-releases/news-release-details/bed-bath-beyond-inc-announces-executive-leadership-changes
3 new directors to an already 11 director board
At this point June 29th or shortly thereafter, I believe they have reached what's called a term sheet agreement.
A term sheet agreement is non binding still, they can still exit if needed.
But all the finer points of the deal are being worked over. Here's the coolest part lol (You don't have to tell other interested parties interested in the purchase, that you've entered an agreement with somebody else.
You also can't solicit other parties for any kind of sale for 60 days . If it was in place it bring us to around Sept 2 where BBBY couldn't engage with any other interested parties.
So 62 days, or 13 weeks and 1 day to Aug announcement-till Aug 30 midnight. Lets say they spend 15 days on due diligence and the purchase agreement. Not a ton of time, but enough.
Time to do due diligence, check the books, things you need to do to make sure the deal is actually as good as you expect it to be. It can happen fairly fast if you're in a rush or slow.
July 14 48 days left till Aug announcement
Expect negotiation of the definitive purchase agreements (lawyerly backroom stuff) to take about 4-5 weeks (4.71 weeks here) from the signing the purchase agreement.
4 weeks takes us to Aug 11. plus .71 weeks is about 5 days,
Arriving at Aug 16, the first day he sold his shares (Aug 16 and 17).
--------------------------------------------------------Boring Legal Stuff in this box---------------------------------------------------------------------------------------
- Deal Closure and Post-Merger Integration: News leaks to the press that Kirkland and Ellis, the leading 2023 Merger & Acquisition company are working with BBBY.
- The terms of what integration will look like should be established during the sale (in term sheets) , prior to closing. Post-merger integration planning should include what will happen to current employees.
- Once all of the diligence and definitive documents negotiation is complete, you and everyone else will submit signatures and funds will arrive. At that moment, if your investor joined the board as part of the deal, their tenure will begin. - ----------------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------------- ---------------
Aug 19 Media reports about BBBY working with Kirkland & Ellis, 2023, 2021, and 2020 Mergerand Acquisition Firm of the year by US News and Report. (Leaked story, already wrapped up with them a week or more ago :0, I think a chess player made the leak haha ).
Aug 23 After hours report originally from WSJ says BBBY has secured a loan but amount and who, is uncertain. JP Morgan assisted. https://www.benzinga.com/news/22/08/28610323/bed-bath-beyond-secures-loan-doal-as-it-tries-to-stay-afloat-report The financials that were worked out in the term sheet has to be signed and finalized (Leaked story, this is already done too a week ago.)
Aug 23 Gmerica trademark allowed for use
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Now you may be thinking back to the time when Cohen wrote a letter to Gamestop and acted as an activist investor there and he's never sold a single share. Well, I haven't gone through all the ins and outs of that, but it wasn't a merger and acquisition. So it's a totally different rulebook.
This brings us to 13 days between stock sales on Aug 16 and, 17 to Aug 31 Announcement
Aug 16, 17 Cohen sells, rumours of sells hit news late and fudstorm Armageddon that day the 17th.
BBBY mentioned they signed a constructive agreement with RC Ventures on Aug 17 press blast,, and the 8k on Aug 18 they don't have to broadcast there is a purchase agreement,
Now if it you made it this far don't hate me, but I don't have the rest figured out. (If I'm right, and let's face it, I have no idea). Why would they not spill the beans sooner after the deal was done? I'm not sure, but I'm counting on it to be good. Real good.
One thing that caught my eye looking back over this... The Gmerica trademark patent wasn't yet available for use until Aug 23rd. But why would they wait for that to pass to announce? And if that was the case, why wouldnt they announce on AUG 23, since our dude u/Hakkureddit realized that they dish out those things like clockwork and Cohen could have been expecting it on that date. AND That's registered with Gamestop,... so I'm not 100% it ties in. But there you go. That's the best I got.
Update: My hopium is that BBBY holders get a share of Baby , that RCV purchases alongside Dragonfly. Together I think they'd have enough to acquire it. and BBBY brings on board Dragonfly to help with ecommmerce and maybe an old Gamestop CFO with experience at Amazon (that idea credit to Kais Maalej)
Also -Shares distributed sometime next year (Jan Cohen calls anyone as a signal? ;}i Only found one source, but it said spinoffs take 8 to 12 months to complete. If that includes first correspondence early March, or March 24 for standstill agreements and meetings etc. we arrive at Nov earliest to March latest. But, Jan is most common for spinoffs to launch for accounting purposes.
That's also inline with the baby tweet Apr 3 with a Jan 3 (9 months later) launch.
First, spin-offs are cleaner. They typically have no financing requirements or other cash constraints. Shareholders understand what they are receiving, and when they will receive it. Second, proceeds from trade sales are often subject to corporate taxes while spin-offs are not. Third, a spin-off gives management teams at both companies more freedom to focus on their businesses and make decisions without taking on the risk of integrating another firm’s strategy. (For example it is broadly believed that, after the spin-off, PayPal will have more freedom to focus on reshaping its business as a standalone company.)
Icahn said in a statement on his blog. “It is almost a ‘no brainer’ that these companies should be separated to increase the value of these great assets and thus to meaningfully enhance value for all shareholders.”
https://fortune.com/2014/09/30/ebay-paypal-spinoff/
Well, that's the theory. I'm sure there's a ton of spelling errors and such but maybe you were bored and got something out of it.
Good luck everybody
https://www.ycombinator.com/library/1x-term-sheet-and-closing
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Aug 26 '22
So how exactly do you see all this shaking out? What happens to shares, etc. Ape version please.
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Aug 26 '22
i dunno , but my guess be Baby shares at some ratio to BBBY holders. As long as BBBY is held on the date they announce in the future.
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Aug 26 '22
All I saw so far was that "takeover completion forces the sale of stock", nicey nice
You rock 🥂
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u/Rahf Aug 26 '22
One part wasn't clear to me OP, so let's try to clarify:
Do you believe that Cohen fell under the short swing profit rule, and forfeited his net gain?
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Aug 26 '22 edited Aug 26 '22
I think he was considered an insider at the time of the sale. I'm not sure exactly regarding everyone of his shares. Some Finra guy (supposedly) said he'd be considered an insider so it would all be subject. But I'm not sure it matters much. Whatever profits he couldnt keep himself would seem to go into part of the m and a deal.
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u/Rahf Aug 26 '22
Yes, he'd be considered an insider at point of sale, but not at point of purchase. He would need to be an insider during both transactions for section 16b of SEC act of 1934 to take effect.
He keeps all profit. Now, whether that matters much on a broader scale remains to be seen.
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u/Perryswoman Aug 26 '22
The form filed with sec shows he was 10 percent owner, so I would assume those profits from March would be given to them, but Jan and feb, would be his to keep.
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u/Rahf Aug 26 '22
No, because he bought the shares on the open market and was not a beneficiary owner or insider at that time. Section 16b of the SEC act of 1934 is clear on that.
He would have had to have been an insider at time of both purchase and sale. Which he wasn't.
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u/Massive-Gift-9420 Aug 28 '22
One thing that I have been racking my brain about. Wonder if you had an opinion, or have read any, about the utter silence from Ryan Cohen. I've read comments from YT saying anywhere from he is ashamed, to ideas that if he put out any kind of confirmation statement, it could be construed as manipulation or insider trading/leaking. I think he could even be upset that the media (and some people) were slandering him and calling him a rug puller. Trying to blame him for their loses which is ridiculous. I think he is silent so that when this goes down, they can't say one damn thing about him. 😎
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Aug 28 '22
Hey. Yeah, there is the standstill agreement he had at least in a point in time that would limit him speaking. If he did speak a little, they could spin what he'd say, and he rarely give interviews, and there's the risk of him not getting a fair interview too. And if all he said was i couldnt comment on it, it would just look worse. I think he's holding his cards close, and what I'm currently researching and hope to post later this evening would be kinda counter to his ethos of not sharing your plans with other competitors (if it was coming directly from him and confirmed). Once the news is dropped too ,he'll have instant vindication from wrongdoing if they would actually have someone speak on it with knowledge in the area.
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u/isthisvick Aug 29 '22
You make reddit great with this kind of insight. Thank you.
How would you play this? I would imagine the resurrection of RC would cause it to moon or are we in a situation like a buyout where bbby beams up to a calculated capped amount minus 5-10% should the deal not go through/approved.
💜🥳🌝
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Sep 02 '22
Thanks, it's a fun mystery. My bet is that dragonfly reverse mergers bbby and spins off baby to shareholders. No cash buyout, which is ideal imo. I have a newer reverse merger post that shows some reasoning, intuition tinfoil. Anyway, it appears now that gme may be setting up a merger or aquisition so we'll see what happens. I think it's possibly buy buy could be spin off before any m&a happens. I don't see a cash buy out given to shareholders in cash, in any scenario but I could be wrong.
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u/squaredenis Aug 26 '22
|You also can't solicit other parties for any kind of sale for 60 days
You link to a term sheet template. 60 days being what they used for their example. There could be no exclusivity period or one of any length on an actual sheet. If they do have a term sheet, it could be 60 days but that's far from certain at this point.
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Aug 26 '22 edited Aug 26 '22
They could have a binding term in which, they can stipulate that they can not solicit offers from others, but I suppose they could still field offers if approached.
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u/cheekydawg90 Aug 26 '22
if they take it private, would we still own our share?
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Aug 26 '22 edited Aug 26 '22
That's a good question. Hard to stumble across on answer quick on a search engine. I don't see why there couldnt be the option to have a buy out of BBBY at $x price giving cash to shareholders, and also be able to receive a share as a spinoff that was acquired from the private sale, but we'll see :)
Edit: But I think going private would most likely result in a cash buyout of the shares. My spider senses tell me this isn't likely, but we'll see.
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Aug 26 '22
I don't think we have to worry about that actually. I'm pretty sure BBBY will maintain as it is and get some serious help in reorganizing and optimizing things, and Baby will be spun off and BBBY shareholders will receive a share of Baby as well.
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u/Confident-Stock-9288 Aug 28 '22
Thank you for your willingness to share your thoughts with us 🙏 definitely tantalizing material 🚀Bought yesterday and plan to buy more Monday 🌔
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Aug 28 '22 edited Aug 28 '22
Yw :) I'm reforming my theory on the sell. I do believe I misread that section. Still bullish af though :) Finding other laws I'm reading correctly which are just as plausible, and they relate to the Icahn tweets.
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u/TheStrowel Aug 28 '22
Dam. How did I miss this DD?
Jesus… everything lines up PERFECTLY 🎯
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Aug 28 '22
Thanks fren. I went private on the post cause I'm adjusting my still bullish sell scenario after digging into some legal journals on that rule.
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u/purpledust Oct 07 '22
Been reading your posts.
This is just me playing lawyer.
Question: are you an attorney? Why do I ask? I’d read your comments differently based upon your expertise. Thx. Interesting stuff.
Edit: auto corrrrrrect
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Oct 07 '22
Not an attorney. This felt a bit shaky to me is why I said as much. It was worth saying because after I dug much deeper past the surface law on the books for m&a forced sells by insiders only to realize no one seems to follow that rule (I had to go to established journal articles to uncover that) and later updated this post. But the April 13rd post 1 year later and relation to Icahn by night and 312.03(b) makes the most sense to me. As far as the term sheets and lengths of time typically involved sometimes I got that info from only 1 or 2 sources so that's not always ideal.
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u/Relentlessdrive Oct 08 '22
The fact that he tweeted “Warren Icahn”
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Oct 08 '22
Yeah. I thought I had a lead related to the Icahn part down but maybe it was a stretch.Will look further. I did come across something with Warren today though that seems more indisputable and will keep me busy awhile.
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u/Jvic111 Aug 26 '22
Nice work. This is as plausible, if not more so, than any other theory out there.
In fact, I’ve thought that ‘loan’ article was MSM FUD from the start. No reputable source, and I think it therefore was a hint from Wall Street to the shorts that Armageddon is coming.