What happened
Shares of Overstock.com (BYON 1.27%) popped on news that the company had acquired intellectual property from Bed Bath & Beyond on Thursday. The company's share price gained 17.9% in the daily session, according to data from S&P Global Market Intelligence.
News emerged early this morning that Overstock had won an auction to acquire the Bed Bath & Beyond name, digital assets, and other intellectual property (IP). The market appears to think that Overstock will be able to make good use of these assets and responded by buying into the company's stock.
So what
After struggling for years, Bed Bath & Beyond filed for bankruptcy in April and is now going through the process of selling assets in order to pay down debts and meet other obligations. Overstock's move to purchase the brand name and other IP from the company does not mean that Bed Bath & Beyond retail stores will remain in operation. The pending $21.5 million sale also does not include any physical assets or IP related to Bed Bath & Beyond's Buy Buy Baby chain.
Now what
A hearing to determine if the deal will be finalized is set to take place on June 27. If the purchase goes through, Overstock will have the opportunity to use Bed Bath & Beyond's branding through its own online retail platform, continue to operate its mobile platform, or setup a new, separate platform for the brand. The move will also bring Bed Bath & Beyond's private label brands under Overstock's corporate umbrella.
While it seems like Overstock may have gotten a good deal on assets that can add value to its overall business, investors should keep in mind that the company has been struggling lately. Revenue fell 29% year over year to land at $381 million in the first quarter, and the company posted a net loss of $10 million.
Depending on the execution, it's possible that integrating assets from Bed Bath & Beyond could give Overstock's business a much-needed boost. On the other hand, it's far too early to consider this move a gamechanger.
