Brookstone Inc reportedly filed for bankrutpcy in order to pursue a company sale to Spencer Spirit Holdings Inc. Bloomberg said that the decision to merge with a competitor indicates a tough market for online non-essentials sellers. Brookstone, who has been selling gadgets such as personal drones and virtual keyboards, is set to sell the company for $147 million.
According to a statement today, the Merrimack, New Hampshire-based company said it will continue to operate with its current employees and managers and that its bondholders have supported the sale. In the sale, novelty retailer Spencer will be paying $120 million in cash and $7.5 million in new notes. It will also absorb about $18.5 million of Brookestone's liabilities.
Chief Executive Officer Jim Speltz had said in the statement, "This agreement will leverage the brand recognition and resources of our two companies. The retail industry continues to evolve and staying ahead of the curve is critical."
In its Chapter 11 documents filed today in U.S. Bankruptcy Court in Wilmington, Delaware, Brookstone has listed as much as half a billion dollars in debt and assets. Brookstone, which was taken private in 2005 by a consortium which include Temasek Holdings Pte, once dominated their own niche market by selling products such as $4,600 massage chairs and $3,000 "Pac Man" arcade systems.
Managing member Robert A. Del Genio at turnaround and restructuring firm CDG Group LLC told Bloomberg in an interview before Brookstone's bankruptcy filing that company giants like Amazon has eclipsed Brookstone from their own niche markets. Del Genio, whose firm managed Sharper Image with its bankruptcy, said, "Sharper Image and Brookstone were places that you went to for unique products. Now you can find it on the Web. That was their niche.
Del Genio said that if Brookstone wouldn't have been more discreet and be more pragmatic, it will still be able to keep its market share. "People are more conscious about how they spend their money," he told Bloomberg.
