New York City Pier 1 Imports Inc. on Friday proposed an acquisition of home-furnishing products retailer Cost Plus Inc. for $4 per share, or just over $88 million in total, according to the Associated Press.
Cost Plus confirmed Monday that it received "a non-binding, highly conditional proposal" from Pier 1. Cost Plus said its board will meet "in due course" to consider the unsolicited offer.
Based on 22.1 million Cost Plus shares outstanding as of April 25, the deal values the company at about $88.3 million.
"Given our similar customer bases and broadly similar business models, but distinct market positions, we believe Cost Plus is an excellent fit with Pier 1 Imports," said Pier 1 president and chief executive Alex W. Smith in a statement.
The CEO said the combination will improve Cost Plus' operating margins and create organizational efficiencies in supply chain management, shared services, store operations and other general administrative costs, the report said.
Smith said Cost Plus shareholders will also benefit from improved operational liquidity of the combined company and a more active trading market.
Pier 1 asked Cost Plus' board to immediately cancel its shareholder rights plan, which is scheduled to expire on June 30. A shareholder rights plan, or "poison pill," is designed to make a hostile takeover more difficult for the buyer.
Pier 1 requested a meeting by Monday to discuss the deal and said it planned to make the letter public if Cost Plus did not agree to a meeting by that date or the companies could not agree on a course of action.
Pier 1 said it believes a transaction could be completed in the third quarter, subject to limited due diligence, the negotiation of a definitive agreement and the receipt of shareholder and regulatory approvals.
J.P. Morgan is acting as Pier 1's financial adviser and Peter J. Solomon Co. is advising Cost Plus.