Bed Bath filed in Delaware’s Court of Chancery on Wednesday.
In the complaint, Bed Bath said that 1-800-Flowers said on March 24 that the outbreak of COVID-19 left the company without the resources necessary to close the deal and integrate the business. 1-800-Flowers said it still wanted to proceed with the deal, but that COVID-19 kept it from satisfying conditions of the closing, therefore requesting to delay the closing.
“1-800-Flowers.com attempted to unilaterally postpone the closing for 30 days citing its lack of resources to integrate the business, but Bed Bath & Beyond had already agreed to provide transitionary support and 1-800-Flowers.com would not commit even to closing at the end of April,” a Bed Bath spokesperson said via email.
“Bed Bath & Beyond recognizes the unprecedented events related to the pandemic and reached out on multiple occasions to collaborate and avoid having to seek the court’s assistance, but 1-800-Flowers.com declined to constructively engage,” he said.
Within the sale agreement is a “material adverse effect” clause that permits 1-800-Flowers.com to terminate the deal if an event occurs that has a disproportionate impact on PersonalizationMmall.com, as opposed to a broad-based impact on the economy. 1-800-Flowers did not invoke the MAE, according to court filings.
A spokesperson for 1-800-Flowers.com called the request for delay reasonable.
“While we still desire to proceed with the transaction, we maintain that the conditions to closing the transaction have not been satisfied in light of the consequences of the COVID-19 pandemic, including the shut-down of the PersonalizationMall.com facilities until at least April 30, 2020,” the spokesperson said. “We intend to vigorously defend ourselves against this lawsuit.”