Bed Bath & Beyond sues 1-800-Flowers to enforce purchase of keepsakes site
April 07, 2020
Beyond simply wanting to follow through on the desired sale, Bed Bath & Beyond could be concerned about “purchase price adjustments,” which are based on financial metrics as of the date of closing, according to Alon Kapen, a partner at law firm Farrell Fritz. Delaying the closing for a month increases the likelihood that there are reasons to lower the purchase price. And failing to sell the business could render it “damaged goods” to some extent, making other buyers less eager to snap it up, he said.
However, whether 1-800-Flowers has ulterior motives or legitimate ones, Delaware courts, in general, are loathe to rule against signed agreements, Kapen said in an interview. In any case, expect to see more such skirmishes in court as the pandemic takes its toll on business, he said.
“This is just the tip of the iceberg,” he said. “I think we’re going to see a lot of situations like this. Buyers, like they always have, will try to walk away from certain deals but will have difficulty without showing disproportionality. And sellers will be forced to take them to court. Each party has its perspective and is looking out for its interests. I think it’s too early to predict how this particular lawsuit and other lawsuits like it are likely to play out.”
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