OAKLAND, Calif.–Cost Plus rejected Pier I Import’s offer to buy its struggling rival, calling the proposed acquisition contrary to the best interest of its shareholders.
“Your proposal to combine our operations is not attractive from either a financial or a strategic perspective,” Cost Plus said in a letter to Pier 1.
Last week, Pier 1 proposed to buy Cost Plus for approximately $88.4 million in common stock. The combined retailer would generate over $2 billion in annual sales and operate about 1,400 stores.
“It is both distracting and ill-timed given the difficult retail environment and the progress we have made investing in and improving our business,” Cost Plus said.
Cost Plus said the retailer’s experienced team, lead by Chief Executive Officer Barry Feld, is poised to generate long-term growth and profitability.
“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 the letter Pier 1 sent to Cost Plus last week, Alex Smith, chairman and CEO of Pier 1, said, “While Pier 1 has made significant progress since its current management team was augmented in 2007, Cost Plus results have continued to deteriorate through multiple management changes to date. … Pier 1’s senior management team is well equipped to implement a speedy turnaround at Cost Plus.”