Cost Plus says 'no thanks' to Pier 1's stock-for-stock merger proposal

By Lisa Kerner

Charlotte, N.C., June 16 - Cost Plus, Inc. said its board of directors unanimously rejected Pier 1 Imports, Inc.'s unsolicited stock-for-stock merger proposal.

According to the board, the offer is not in its shareholders' best interests, a Cost Plus news release noted.

In a June 16 letter to Pier I, Cost Plus called the offer "distracting and ill-timed" in light of the difficult retail environment.

Pier 1 said it was "disappointed" in the recommendation by Cost Plus' board to reject the offer.

Alex W. Smith, Pier 1 president and chief executive officer, called the offer "extremely compelling" and believes the offer would create significant value for the stakeholders of both companies.

Smith added that Cost Plus made no effort to discuss the offer with Pier 1.

As a result, Smith said Pier 1 intends "to work directly with the shareholders of Cost Plus to make this transaction a reality."

As previously reported, Pier 1 made the terms of the proposal public after Cost Plus failed to meet with Pier 1, a Fort Worth, Texas, specialty retailer, as requested before the start of business on June 9.

In its June 6 letter to Cost Plus, Pier 1 said it would issue 0.6 shares of its common stock for each share of Cost Plus common stock valued at about $4 per share based the closing prices of Pier 1 and Cost Plus on June 6.

The offer price is a 34% premium over the average closing price of Cost Plus shares for the last 30 trading days prior to the offer, the letter noted.

Smith had asked Cost Plus to terminate its shareholder rights plan that expires June 30 and to refrain from renewing or extending the plan or adopting any other rights plan or poison pill.

Pier 1 estimates that its common shareholders own approximately 62% of Cost Plus' outstanding shares, a prior news release said.

Cost Plus is a specialty retailer located in Oakland, Calif.

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