Bed Bath & Beyond Buys The Container Store

Bed Bath & Beyond (Murray, Utah) has acquired The Container Store (Coppell, Texas) and its Elfa and Closet Works affiliates for $150 million in stock and convertible ones. That move comes less than two years after BB&B backed away from pumping $40 million into The Container Store. (Shortly after that, the home-organization business filed for Chapter 11 bankruptcy and emerged from that process as a privately held company owned by its lenders, including Golub Capital, Glendon Capital Management and LCM Asset Management.)

BB&B disclosed its buy in an 8-K Filing with the U.S. Securities and Exchange Commission (such filings are required when a company makes a major, unscheduled material event that shareholders need to know about). BB&B Executive Chairman and CEO Marcus Lemonis, detailed the reasoning behind the buy in an open letter to shareholders, calling it “a critical step” in the company’s growth plans.
As part of that effort, The Container Store’s locations will be rebranded The Container Store/Bed Bath and Beyond stores, while the Elfa and Closet Works units will anchor BB&Y’s home services division.

“We have studied The Container Store business for over 18 months because it brings not only more than 100 trophy locations, but also a culture and operating discipline that aligns with the standards we are building,” Lemonis wrote. “These locations represent over 2.2 million square feet of premium retail space. Today, the utilization of those assets falls below our expectations. We see a meaningful opportunity to better leverage these locations by expanding assortment, introducing additional brands and creating a more comprehensive experience for the homeowner.”

Lemonis also said his company believes it can wring at least $40 million in annualized cost savings and productivity efficiencies by fully integrating its Kirkland’s Home, The Container Store, Elfa and Closet Works units. The acquisitions of the latter three entities are expected to close by July.