Big Lots to Commence Going Out of Business Sales as Acquisition Deal Falls Apart
Big Lots is on the market for another big buyer to save its business. The off-price home retailer’s previously announced asset purchase agreement with Nexus Capital Management has taken a turn, putting it one step closer to collapse.
The embattled Columbus, Oh.-based firm on Thursday revealed that the deal, announced in September, has fallen through—“though it continues to work toward completing an alternative going concern transaction with Nexus or another party.”
A going concern transaction would give the company the funding it needs to continue operating as usual. The company said its goal is to see the issue resolved by early January.
Watch on FN
While it attempts to drum up other offers or resurrect an agreement with Nexus, Big Lots said it will commence going out of business (GOB) sales at all remaining store locations over the coming days. This should not preclude it from executing a going concern transaction with a prospective partner, the company believes.
“We all have worked extremely hard and have taken every step to complete a going concern sale,” president and CEO Bruce Thorn said. “While we remain hopeful that we can close an alternative going concern transaction, in order to protect the value of the Big Lots estate, we have made the difficult decision to begin the GOB process.”
Consumers will be able to shop in-store and online during the closeout sales.
The development is a disappointing turn for Big Lots, which filed for Chapter 11 bankruptcy protection this fall. Through that process, Nexus agreed to acquire the retailer’s assets and remaining business operations at a price of $760 million, putting it in the No.1 spot as the stalking-horse bidder.
In October, Nexus announced that it had obtained $765 million in committed financing for the acquisition, indicating that it was full steam ahead. Late last month, Big Lots released a statement saying it had received court approval for the sale.
But the deal, which was slated to close in early December, apparently crumbled due to a recent valuation appraisal of the company’s inventory, which was lower than expected, according to a report from the Los Angeles Times. People with knowledge of the matter said that this made the economics of the sale to Nexus inviable.
Big Lots made attempts this fall to boost its flagging business, pulling forward the start of its holiday sales to early October, and staging “Black Friday” blowouts every Friday through the month of December.
At the Thursday hearing on the matter, Big Lots lawyer Brian M. Resnick said the company was in talks with Nexus about acquiring several hundred retail locations instead of all of the remaining 870 stores, the L.A. Times reported. Such a deal would need to come together quickly, the judge said, characterizing the situation as “a melting ice cube.”
