(Bloomberg) — Bed Bath & Beyond Inc. has reached an agreement with activist investor Ryan Cohen that will see three independent directors appointed to the retailer’s board, sending shares up as much as 8%.
The new board members were chosen by Cohen’s RC Ventures, according to a statement confirming an earlier Bloomberg News report. Two of the three members will also join a special committee to weigh strategic alternatives for Buybuy Baby, an asset which the activist had identified to potentially be sold. The special committee had already been formed in January, according to a person familiar with the matter.
Mark Tritton, Bed Bath & Beyond’s chief executive officer, said in the statement that the company looked forward to integrating the new directors’ ideas. “Our Buybuy Baby business is a tremendous asset, and we are committed to unlocking its full value,” he added.
RC Ventures disclosed a 9.8% stake in Bed Bath & Beyond this month, had called on the retailer to implement several changes, including exploring a sale of Buybuy Baby or the entire company. Cohen argued the company needs to narrow its focus and maintain the right inventory mix to meet demand.
Marjorie L. Bowen, Shelly C. Lombard and Ben Rosenzweig have been named to the board effective immediately, and Bowen and Rosenzweig will join the four-person Buybuy Baby committee.
Cohen, co-founder of Chewy Inc. and chairman of GameStop Corp., has had a strong following of retail traders who piled into shares of both the pet supply chain and video-game retailer at the height of the coronavirus pandemic. GameStop surged 688% last year and 210% in 2020.
Shares in GameStop rallied this week after Cohen bought 100,000 shares in the beleaguered video game retailer, boosting his stake to 11.9%.
It’s the second time Bed Bath has been targeted by activist investors. In 2019, the retailer was pushed to revamp its strategy by a group of investors, including Ancora Holdings, Macellum Capital Management and Legion Partners Capital Management. That fight also resulted in a settlement that saw four new directors appointed to its board.
Bed Bath shares rose 8% to $23.88 at 9:37 a.m. in New York, giving the company a market value of $2.2 billion Friday.
(Updates with trading starting in the second line)
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