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19 Retail Takeovers: Rumors Run Rampant

Build-A-Bear Workshop

Build-A-Bear Workshop (BBW) is seeking a buyer, according to reports.

The retailer, which allows shoppers to create personalized teddy bears, has approached private-equity firms, Bloomberg reported, citing sources familiar with the matter.

Barclays Capital is reportedly advising the company on a potential sale. Build-A-Bear Workshop has a market cap of $155.7 million.

Susquehanna Financial analyst Thomas Filandro believes a takeover of the company is highly likely, with both private equity or a strategic buyer having interest in Build-A-Bear.

"We believe a deal would make sense for both buyer and seller. Build-A-Bear's high cash flow generation, healthy balance sheet, reasonable inside ownership, unique brand concept offering an emotionally connective product and shopping experience, and brand presence both domestically and internationally, provide a solid platform for future growth," he wrote in a note.

This is not the first time Build-A-Bear eyed a sale. In 2007 the company said it was exploring "strategic alternatives," but that effort did not yield sufficient offers.

"But it was also the early stages of an epic contraction in credit and buyout activity," Needham analyst Sean McGowan wrote in a note.

At the time, Build-A-Bear's shares were hovering around $20. While the company has not recovered to 2007 levels of sales and profits, McGowan says the company is much stronger than it was 12 months ago.

"We believe that with Build-A-Bear's recent results suggesting a turnaround is well underway, and the private equity market for consumer companies showing strength this year, Build-A-Bear could be a good candidate for a buyout," McGowan wrote.

But he warns that a suitable buyer may not offer a price acceptable to the board and shareholders.
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