Barclay's Positive On Bed Bath & Beyond's New Acquisition

Bed Bath & Beyond Inc. BBBY has announced the acquisition of One Kings Lane in an all-cash deal, although the price was undisclosed.

Barclays’ Matthew McClintock maintains an Equal Weight rating on Bed Bath & Beyond, with a price target of $50.

“The acquisition is expected by the company to be slightly dilutive to BBBY's earnings for FY16, after transaction and integration costs,” McClintock mentioned.

One Kings Lane

The analyst explained that One Kings Lane was an online retailer of home furnishings and furniture, with design studios in New York and San Francisco, working directly with designers, "taste-makers" and dealers to create its merchandise assortment.

The company was estimated to have achieved sales of $350 million in 2014, representing 7.8 percent year-on-year growth.

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“Founded as a flash sale site in 2009 by Ali Pincus and Susan Feldman, it reportedly reached a ~$900 million valuation in Jan. 2014 backed by VC funding,” according to the Barclays report.

The company underwent restructuring, layoffs and a shift away from flash sales, moving to curated lifestyle offerings and designer partnerships with proprietary merchandise.

Impact Of The Acquisition

According to news reports earlier in 2016, it was speculated that One Kings Lane would be sold for $150–$230 million.

McClintock expects the deal to serve as a potential catalyst for Bed Bath & Beyond, while also further diversifying the company’s business by expanding its exposure to home furniture.