Bed Bath & Beyond (BBBY -9.45%) announced yesterday that it has reached a deal with 1-800-Flowers.com (FLWS -4.04%) after the home goods retailer sued the flower company for putting a deal to acquire PersonalizationMall.com on hold.
Part of Bed Bath & Beyond's survival strategy is to shed the agglomeration of businesses collected by previous management. PersonalizationMall.com, an online site that personalizes items for consumers, was one of those deemed not part of the retailer's core business and was sold to 1-800-Flowers in February for $252 million.
In March, as the coronavirus pandemic gripped the United States, 1-800-Flowers looked to put the deal on hold, a move Bed Bath & Beyond was not supportive of. In April, Bed Bath & Beyond sued 1-800-Flowers to force it to close the sale.
Burying the hatchet
Under the terms of the new agreement, 1-800-Flowers will pay Bed Bath & Beyond $245 million, subject to certain working capital and other adjustments. They expect the deal will be completed by Aug. 3, but the home goods retailer is taking no chances and will wait for the transaction to be finalized before withdrawing its lawsuit.
1-800-Flowers had wanted to delay the closing of the purchase until April 30 because the COVID-19 outbreak had cut off its resources to finish the transaction and integrate the business. Even PersonalizationMall.com's business was closed.
Bed Bath & Beyond responded in the lawsuit by saying, "Even a calamitous event such as COVID-19 does not permit a party to avoid its obligations."
Although it seems the home goods retailer could have offloaded the business sooner if it had acquiesced to the request, the deepening nature of the pandemic might have caused 1-800-Flowers to further delay or even cancel the transaction.