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Bed Bath & Beyond in deal with activist investor

Bed Bath & Beyond has struck a deal with activist investor Ryan Cohen.

Bed Bath & Beyond Inc. has avoided a showdown with its activist investor Ryan Cohen, who previously shook things up at GameStop, where he is now chairman.

The home goods retailer said it has reached a "cooperation agreement" with Cohen’s firm RC Ventures LLC, which recently revealed a 9.8% stake in Bed Bath & Beyond. As part of the deal, three of RC Ventures' director designees will immediately join the company’s board as new independent directors. The new directors — Marjorie Bowen, Shelly Lombard and Ben Rosenzweig — collectively “bring deep expertise in capital allocation, corporate governance, strategic planning and transactions,” stated the retailer.

In addition, Bed Bath & Beyond said that a four-person “strategy committee” will look into alternatives for its Buybuy Baby chain and make recommendations to the board. The committee will include two of the new directors, Bowen and Rosenzweig.

Earlier this month, Cohen, the co-founder of Chewy, sent a letter to the Bed Bath & Beyond board in which he said the company has failed to stem sustained market share losses, adding that core sales dropped 14% year-over-year in its most recent quarter. He called for a shakeup in its operations and said the company should explore alternatives, including a sale.

"We believe Bed Bath needs to narrow its focus to fortify operations and maintain the right inventory mix to meet demand, while simultaneously exploring strategic alternatives that include separating buybuy Baby, Inc and a full sale of the company," Cohen wrote.

Under the leadership of Mark Tritton, who took the reins as CEO in late 2019, Bed Bath & Beyond is in the middle of a multi-year transformation that includes closing underperforming locations, refreshing and updating stores and a big emphasis on private label brands. The company has also made significant investments in digital operations and sold its non-core assets, including Christmas Tree Shops and Cost Plus World Market.

“Our company and board have always been committed to evaluating all options to maximize long-term shareholder value, and we look forward to integrating our new directors' ideas to drive our continued transformation,” Tritton said on Friday. “Our buybuy Baby business is a tremendous asset, and we are committed to unlocking its full value.”

In a statement, Cohen called the agreement “a positive outcome for all of Bed Bath's shareholders.”

“By refreshing the Board with shareholder-designated individuals who possess capital markets acumen and transaction experience, the company is well-positioned to review alternatives for BuyBuy Baby,” he said. “I appreciate that management and the board were willing to promptly embrace our ideas and look forward to supporting them in the year ahead."

Harriet Edelman, independent chair of Bed Bath & Beyond released the following statement.

"We are pleased to have reached this constructive agreement with RC Ventures, which we believe to be in the best interest of all our shareholders,” he said. “The board is highly committed to fundamentally reshaping Bed Bath & Beyond for our customers while driving growth and profitability across its banners. We look forward to benefitting from the contributions and perspectives of our new directors."

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