Bed Bath & Beyond rocketed about 20 percent higher Tuesday as three different activist investors prepare to replace its entire 12-person board.
Legion Partners Asset Management, Macellum Advisors and Ancora Advisors will try to leverage their collective 5 percent stake to prepare to launch a proxy fight at the big-box retailer, according to a person familiar with the situation.
The coalition believes the company has fallen behind as more customers pivot to online shopping and allowed its costs to drifted higher in recent years, the person added. It also hopes to oust Chief Executive Steven Temares, who has led Bed Bath & Beyond since 2003.
The stock was poised for its best day since April 2009; nearly 33 percent of the equity is sold short. Bed Bath & Beyond did not immediately respond to CNBC's request for comment.
The activist trio isn't pushing for a sale of the entire company, another person familiar with the situation told CNBC. Instead, they'd like to see Bed Bath & Beyond consider sales of underperforming assets such as Buy Buy Baby and decor retail chain Cost Plus World Market.
Raymond James upgraded the stock in light of the news, with analyst Bobby Griffin writing that "within the foreseeable future, Bed Bath & Beyond may either no longer be a public company or on a journey to go private."
"The arguments that have caused investor antipathy to Bed Bath & Beyond are real and center on the tired nature of its nearly 1,000 North American Bed Bath & Beyond stores," Griffin added. "Irrespective of the elevated capital investment of the past several years, management has been slow to invest in its stores."
"Meanwhile, too many of the stores we have visited in a wide variety of states over the last few months are cluttered and dirty. This will likely add credibility to any activist style campaign," Griffin told clients.
