The apparel and accessories retailer announced the purchase of 47 Buddy’s Home Furnishings rent-to-own franchises from Franchise Group for $35 million. The agreement also grants Bebe the rights to build additional franchises in protected geographies throughout the Southeastern United States.
“This is a transformational acquisition that will not only be materially accretive to Bebe’s cash flow over time, but also provides a platform for future growth through the development agreement,” said Manny Mashouf, CEO, Bebe. “The acquired Buddy’s stores have a strong and consistent record of free cash flow generation across multiple market cycles.”
Bebe Stores closed all of its stores in 2017 to focus on its online business. It transferred its intellectual property rights, including licensing revenue and its website, to BB Brand Holdings, an operating subsidiary 50% owned by Bluestar Alliance, a brand management company. In 2018, Global Brands Group Holding Limited announced it was partnering with Bebe to relaunch an e-commerce platform and its international brick-and-mortar stores. Also in 2018, Bebe partnered with Bluestar Alliance to acquire the Brookstone brand and related assets.
Mashouf added that the Buddy’s acquisition diversifies Bebe’s profit stream and “better utilizes existing net operating loss carryforwards.”
“Additionally, the expanded operational infrastructure being developed for this transaction can be leveraged to support additional acquisitions of high free cash flow entities in the future,” he said.
The transaction will be funded by a 1.5 million primary share purchase by B. Riley Financial for $5.00 per share, a $22 million secured loan led by Milfam and available cash on hand.
bebe is a global specialty licensor of women’s apparel and accessories that distributes bebe branded products worldwide through its licensees in approximately 100 international stores and www.bebe.com.