Investor Group Files Complaint against Bed Bath & Beyond to Protect Shareholder Rights to a Fair Election
Believes the Company is seeking to disenfranchise shareholders and
gain an unfair advantage in the proxy contest
Bed Bath’s continued governance issues underscore that meaningful
change is needed at the Company now
Legion revises slate to 10 nominees given Company’s reduction in size
of Board
NEW YORK–(BUSINESS WIRE)–Legion Partners Holdings, LLC (“Legion Partners Holdings” together with
its affiliates, “Legion Partners”), Macellum Advisors GP, LLC (together
with its affiliates, “Macellum”), and Ancora Advisors, LLC (together
with its affiliates, “Ancora” and, together with Legion Partners and
Macellum, “the Investor Group”) today announced that Legion Partners
Holdings has filed a complaint in the United States District Court,
Southern District of New York against Bed Bath & Beyond Inc. (NASDAQ:
BBBY) (“Bed Bath” or the “Company”). The complaint focuses on the
Company’s efforts to subvert the rights of shareholders in relation to
Legion Partners Holdings’ nomination of a full slate of highly-qualified
director candidates for election to the Board of Directors (the “Board”)
at the 2019 Annual Meeting of Shareholders (the “2019 Annual Meeting”) –
specifically, the Company’s refusal to take steps to ensure that the
election of our director nominees will not trigger certain change in
control provisions.
The Investor Group issued the following statement in connection with the
filing of the complaint:
“In order to avoid triggering potential adverse financial consequences
under Bed Bath’s $1.5 billion notes if a majority of our nominees were
to be elected at the 2019 Annual Meeting, the Board can take the simple
step of approving our nominees. Rather than doing this in a timely
fashion – in order to ensure a free and fair election without the threat
of such potential consequences – the Board has instead sought to put up
unnecessary obstacles, leaving us no choice but to file a legal
complaint against the Company.
We believe the Board is trying to disenfranchise shareholders to gain an
unfair advantage at the 2019 Annual Meeting, and we are highly
disappointed that Bed Bath has resorted to these maneuvers. All
shareholders should recognize these tactics for what they are: further
evidence that the current Board and leadership of Bed Bath are unable or
unwilling to act in the best interests of shareholders and that more
meaningful change is needed now.
To be clear, under the Company’s indenture governing approximately $1.5
billion of senior unsecured notes, a change of control can occur upon a
change of a majority of the Board followed by a rating downgrade. If
such a downgrade occurred after the election of Legion’s slate, the
Company would need to make a change of control offer at 101% of the
principal amount of debt under the notes plus accrued interest.
The Board has the discretionary authority to approve of a dissident’s
nominees as “continuing directors” for the sole purpose of preventing
any negative effects from shareholders exercising their right to effect
meaningful change at the Board level. Such approval is not an
endorsement or recommendation and the Company may otherwise oppose the
nominees in a proxy fight. Approving the nominees as continuing
directors allows shareholders to elect the most qualified directors on
the merits without being influenced by the significant payments that the
Company may be obligated to make if the change of control provisions
were triggered.
Importantly, courts have held that the failure to
provide such an approval may constitute a breach of the Board’s duty of
loyalty and care. Despite repeated requests to have the Board
approve of our nominees, the Board has refused, arguing it may not be
able to “approve” of the nominees without endorsing the nominees or
interviewing them, notwithstanding Legion Partners Holdings submitting
almost 1,500 pages of information required under the Company’s onerous
requirements and subsequent requests for additional information, which
clearly has provided the Board sufficient information to assess the
qualification of the nominees.
If shareholders conclude that the Investor Group’s nominees should be
elected to the Board, that determination alone should suffice. The
Board’s suggestion that it can override shareholder wishes and risk a
default under its material agreements is improper and unlawful.
The Company’s tactics, in our view, represent further examples of its
seeming focus on resisting the will of shareholders at all costs.
Sweeping change is urgently needed – which is why Legion Partners
Holdings has nominated a slate of highly-qualified, independent
candidates to the Board at the 2019 Annual Meeting of Shareholders.
Given the Company’s recently-announced reduction in the size of the
Board to 10, we have updated our slate to 10 nominees. We are committed
to continuing to take on the hard work necessary to make improvements at
Bed Bath for the benefit of all stakeholders.”
For more information visit https://restorebedbath.com/.
About Legion Partners
Legion Partners is a long-term-oriented activist fund focused on
producing superior risk-adjusted returns for clients. Legion Partners’
investment strategy is concentrated on North American small cap
equities, utilizing deep fundamental research and long-term shareholder
engagement to drive superior performance over time.
About Macellum
Macellum has substantial experience investing in consumer and retail
companies and assisting such companies in improving their long-term
financial and stock price performance. Macellum’s historical investments
include: Collective Brands, GIII Apparel Group, Hot Topic, Charming
Shoppes and Warnaco, among other companies. Macellum prefers to
constructively engage with management to improve its governance and
performance for the benefit of all stockholders, as it did with Perry
Ellis. However, when management is entrenched, Macellum has run
successful proxy contests to effectuate meaningful change, including at
The Children’s Place, Christopher & Banks and most recently at Citi
Trends.
About Ancora Advisors
Ancora Holdings, Inc. is an employee owned, Cleveland, Ohio based
holding company which wholly owns three separate and distinct SEC
Registered Investment Advisers, Ancora Advisors, Inc., Ancora Family
Wealth Advisors, LLC and Ancora Retirement Plan Advisors, Inc. and
Inverness Securities LLC, a broker dealer. Ancora Advisors, LLC
specializes in customized portfolio management for individual investors,
high net worth investors, investment companies (mutual funds), pooled
investments (hedge funds/investment limited partnerships), and
institutions such as pension/profit sharing plans, corporations,
charitable & “Not-for Profit” organizations, and unions. Ancora Family
Wealth Advisors, LLC is a leading, regional investment and wealth
advisor managing assets on behalf families and high net-worth
individuals. Ancora Retirement Plan Advisors, Inc. specializes in
providing non-discretionary investment guidance for small and midsize
employer sponsored retirement plans.
CERTAIN INFORMATION CONCERNING PARTICIPANTS
Legion Partners Holdings, LLC, a Delaware limited liability company
(“Legion Partners Holdings”), Macellum Advisors GP, LLC, a Delaware
limited liability company (“Macellum GP”), and Ancora Advisors, LLC, a
Delaware limited liability company (“Ancora Advisors”) together with the
participants named herein, intend to file a preliminary proxy statement
and accompanying WHITE proxy card with the Securities and Exchange
Commission (“SEC”) to be used to solicit votes for the election of their
slate of ten highly qualified director nominees at the 2019 annual
meeting of shareholders of Bed Bath & Beyond Inc., a New York
corporation (the “Company”).
LEGION PARTNERS HOLDINGS, MACELLUM GP, AND ANCORA ADVISORS STRONGLY
ADVISE ALL SHAREHOLDERS OF THE COMPANY TO READ THE PROXY STATEMENT AND
OTHER PROXY MATERIALS AS THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN
IMPORTANT INFORMATION. SUCH PROXY MATERIALS WILL BE AVAILABLE AT NO
CHARGE ON THE SEC’S WEB SITE AT HTTP://WWW.SEC.GOV.
IN ADDITION, THE PARTICIPANTS IN THIS PROXY SOLICITATION WILL PROVIDE
COPIES OF THE PROXY STATEMENT WITHOUT CHARGE, WHEN AVAILABLE, UPON
REQUEST.
The participants in the proxy solicitation are Legion Partners Holdings,
Legion Partners, L.P. I, a Delaware limited partnership (“Legion
Partners I”), Legion Partners, L.P. II, a Delaware limited partnership
(“Legion Partners II”), Legion Partners Special Opportunities, L.P. XII,
a Delaware limited partnership (“Legion Partners Special XII”), Legion
Partners, LLC, a Delaware limited liability company (“Legion LLC”),
Legion Partners Asset Management, LLC, a Delaware limited liability
company (“Legion Partners Asset Management”), Christopher S. Kiper,
Raymond T. White, Macellum GP, Macellum Home Fund, LP, a Delaware
limited partnership (“Macellum Home”), Macellum Management, LP, a
Delaware limited partnership (“Macellum Management”), Jonathan Duskin,
Ancora Catalyst Institutional, LP, a Delaware limited partnership
(“Ancora Catalyst Institutional”), Ancora Catalyst, LP, a Delaware
limited partnership (“Ancora Catalyst”), Merlin Partners Institutional,
LP, a Delaware limited partnership (“Merlin Institutional”), Ancora
Merlin, LP, a Delaware limited partnership (“Ancora Merlin”), Ancora
Special Opportunity Fund, a series of the Ancora Trust, an Ohio business
trust (“Ancora Special Opportunity”), Ancora/Thelen Small-Mid Cap Fund,
a series of the Ancora Trust, an Ohio business trust (“Ancora/Thelen”),
Ancora Advisors, LLC, a Nevada limited liability company (“Ancora
Advisors”), Frederick DiSanto, Theresa R. Backes, John E. Fleming, Sue
Ellen Gove, Janet E. Grove, Jeffrey A. Kirwan, Jeremy I. Liebowitz,
Cynthia S. Murray, Hugh R. Rovit and Alexander W. Smith.
As of the date of this press release, Legion Partners I directly
beneficially owns 3,452,124 shares of common stock, par value $0.01 per
share (the “Common Stock”) of the Company, including 898,000 shares
underlying long call options, Legion Partners II directly beneficially
owns 199,952 shares of Common Stock, including 52,000 shares underlying
long call options, Legion Partners Special XII directly beneficially
owns 982,000 shares of Common Stock, including 200,000 shares underlying
long call options, and Legion Partners Holdings directly beneficially
owns 200 shares of Common Stock in record name and as the sole member of
Legion Partners Asset Management and sole member of Legion LLC, Legion
Partners Holdings may also be deemed to beneficially own the 3,452,124
shares of Common Stock beneficially owned directly by Legion Partners I,
including 898,000 shares underlying long call options, 199,952 shares of
Common Stock beneficially owned directly by Legion Partners II,
including 52,000 shares underlying long call options, and 982,000 shares
of Common Stock beneficially owned directly by Legion Partners Special
XII, including 200,000 shares underlying long call options. As the
general partner of each of Legion Partners I, Legion Partners II and
Legion Partners Special XII, Legion LLC may be deemed to beneficially
own the 3,452,124 shares of Common Stock beneficially owned directly by
Legion Partners I, including 898,000 shares underlying long call
options, 199,952 shares of Common Stock beneficially owned directly by
Legion Partners II, including 52,000 shares underlying long call
options, and 982,000 shares of Common Stock beneficially owned directly
by Legion Partners Special XII, including 200,000 shares underlying long
call options. As the investment advisor of each of Legion Partners I,
Legion Partners II and Legion Partners Special XII, Legion Partners
Asset Management may be deemed to beneficially own the 3,452,124 shares
of Common Stock beneficially owned directly by Legion Partners I,
including 898,000 shares underlying long call options, 199,952 shares of
Common Stock beneficially owned directly by Legion Partners II,
including 52,000 shares underlying long call options, and 982,000 shares
of Common Stock beneficially owned directly by Legion Partners Special
XII, including 200,000 shares underlying long call options. As a
managing director of Legion Partners Asset Management and managing
member of Legion Partners Holdings, Mr. Kiper may be deemed to
beneficially own the 3,452,124 shares of Common Stock beneficially owned
directly by Legion Partners I, including 898,000 shares underlying long
call options, 199,952 shares of Common Stock beneficially owned directly
by Legion Partners II, including 52,000 shares underlying long call
options, 982,000 shares of Common Stock beneficially owned directly by
Legion Partners Special XII, including 200,000 shares underlying long
call options and 200 shares of Common Stock beneficially owned directly
by Legion Partners Holdings. As a managing director of Legion Partners
Asset Management and managing member of Legion Partners Holdings, Mr.
White may be deemed to beneficially own the 3,452,124 shares of Common
Stock beneficially owned directly by Legion Partners I, including
898,000 shares underlying long call options, 199,952 shares of Common
Stock beneficially owned directly by Legion Partners II, including
52,000 shares underlying long call options, 982,000 shares of Common
Stock beneficially owned directly by Legion Partners Special XII,
including 200,000 shares underlying long call options and 200 shares of
Common Stock beneficially owned directly by Legion Partners Holdings.
Macellum Home directly beneficially owns 446,415 shares of Common Stock,
including 89,500 shares underlying long call options. As the investment
manager of Macellum Home, Macellum Management may be deemed to
beneficially own the 446,415 shares of Common Stock beneficially owned
directly by Macellum Home, including 89,500 shares underlying long call
options. As the general partner of Macellum Home, Macellum GP may be
deemed to beneficially own the 446,415 shares of Common Stock
beneficially owned directly by Macellum Home, including 89,500 shares
underlying long call options. As the sole member of Macellum GP, Mr.
Duskin may be deemed to beneficially own the 446,415 shares of Common
Stock beneficially owned directly by Macellum Home, including 89,500
shares underlying long call options. Ancora Catalyst Institutional
directly beneficially owns 244,195 shares of Common Stock, including
83,700 shares underlying long call options, Ancora Catalyst directly
beneficially owns 18,380 shares of Common Stock, including 6,300 shares
underlying long call options, Merlin Institutional directly beneficially
owns 235,455 shares of Common Stock, including 81,000 shares underlying
long call options, Ancora Merlin directly beneficially owns 27,121
shares of Common Stock, including 9,000 shares underlying long call
options, Ancora Special Opportunity directly beneficially owns 20,000
shares of Common Stock and Ancora/Thelen directly beneficially owns
96,780 shares of Common Stock. As the investment advisor to each of
Ancora Catalyst Institutional, Ancora Catalyst, Merlin Institutional,
Ancora Merlin, Ancora Special Opportunity, Ancora/Thelen and certain
separately managed accounts, including accounts held by owners and
employees of Ancora Advisors of which Ancora Advisors has sole voting
and dispositive power over (collectively, the “SMAs”), Ancora Advisors
may be deemed to beneficially own the 244,195 shares of Common Stock
beneficially owned directly by Ancora Catalyst Institutional, including
83,700 shares underlying long call options, 18,380 shares of Common
Stock beneficially owned directly by Ancora Catalyst, including 6,300
shares underlying long call options, 235,455 shares of Common Stock
beneficially owned directly by Merlin Institutional, including 81,000
shares underlying long call options, 27,121 shares of Common Stock
beneficially owned directly by Ancora Merlin, including 9,000 shares
underlying long call options, 20,000 shares of Common Stock beneficially
owned directly by Ancora Special Opportunity, 96,780 shares of Common
Stock beneficially owned directly by Ancora/Thelen and 1,187,317 shares
of Common Stock held in the SMAs. As the Chairman and Chief Executive
Officer of Ancora Advisors, Mr. DiSanto may be deemed to beneficially
own the 244,195 shares of Common Stock beneficially owned directly by
Ancora Catalyst Institutional, including 83,700 shares underlying long
call options, 18,380 shares of Common Stock beneficially owned directly
by Ancora Catalyst, including 6,300 shares underlying long call options,
235,455 shares of Common Stock beneficially owned directly by Merlin
Institutional, including 81,000 shares underlying long call options,
27,121 shares of Common Stock beneficially owned directly by Ancora
Merlin, including 9,000 shares underlying long call options, 20,000
shares of Common Stock beneficially owned directly by Ancora Special
Opportunity, 96,780 shares of Common Stock beneficially owned directly
by Ancora/Thelen and 1,187,317 shares of Common Stock held in the SMAs.
As of the date hereof, John E. Fleming directly beneficially owns 5,000
shares of Common Stock. As of the date hereof, none of Theresa R.
Backes, Sue Ellen Gove, Janet E. Grove, Jeffrey A. Kirwan, Jeremy I.
Liebowitz, Cynthia S. Murray, Hugh R. Rovit or Alexander W. Smith own
beneficially or of record any securities of the Company.
Contacts
Media:
Sloane & Company
Dan Zacchei / Joe Germani
212.486.9500
dzacchei@sloanepr.com
/ jgermani@sloanepr.com
Investors:
John Ferguson / Joe Mills
Saratoga Proxy
Consulting LLC
(212) 257-1311
info@saratogaproxy.com