Cost Plus rejects Pier 1
Calls proposal 'distracting, ill-timed'
By Larry Thomas -- Furniture Today, June 23, 2008
OAKLAND, Calif. — Top 100 retailer Cost Plus said last week its board had unanimously rejected a merger proposal made by fellow Top 100 store Pier 1 Imports.
In a letter to Pier 1 President Alexander Smith and Chairman Tom Thomas, Cost Plus's board said the merger proposal “is not in the best interests of Cost Plus and its shareholders.”
“Your proposal to combine our operations is not attractive from either a financial or strategic perspective,” the letter read. “It is both distracting and ill-timed given the difficult retail environment and the progress we have made investing in and improving our business.”
The Cost Plus board said the company's existing strategic plan already is showing positive results, and board members rejected Pier 1's suggestion that Cost Plus is having liquidity problems.
“Despite your statements to the contrary, Cost Plus has significant liquidity to pursue its business objectives and to deliver improvement in our core business metrics,” the letter said.
In its proposal, Pier 1 said it would issue 0.6 shares of its common stock for each share of Cost Plus stock. It said at the time of the offer that the deal would be worth about $88.4 million.
Pier 1 said the exchange ratio implied a value of $4 per share for Cost Plus stock, a 31% premium over the closing price just prior to announcing the bid.
Cost Plus operates 292 Cost Plus World Market stores in 33 states. Pier 1 has about 1,040 stores in the United Staes and Puerto Rico.
Ranked No. 8 on Furniture/Today's Top 100, Pier 1 had estimated furniture, bedding and accessories sales of $1.08 billion in its fiscal year ended March 1 and total revenues of $1.37 billion. Cost Plus, ranked No. 24, had an estimated $375 million in furniture, bedding and accessories sales and total revenues of $1.02 billion in its fiscal year ended Feb. 2.
