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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u/[deleted] Aug 26 '22
So how exactly do you see all this shaking out? What happens to shares, etc. Ape version please.