Pier 1: We need to educate shareholders
June 20, 2008,
Fort Worth, Texas – Pier 1 still “has a job to do” in convincing its shareholders and those of Cost Plus that combining the companies would be a sound transaction, Pier 1’s chief acknowledged during the company’s shareholder meeting this morning.
Smith said he had spoken to shareholders who professed to be against the acquisition, only to learn they had never visited a Cost Plus store.
Cost Plus’s board has rejected Pier 1’s unsolicited, stock-for-stock acquisition offer. Pier 1 is offering a 0.6 share of Pier 1 common stock for 1.0 share of Cost Plus common stock. Cost Plus’s board deemed it “not attractive,” “distracting and ill-timed.” The board asserted Cost Plus has significant liquidity.
Pier 1 is arguing that its $450 million asset-based lending facility will provide plenty of liquidity to grow both retail concepts, especially as it projects cutting some $50 million out of Cost Plus’s overhead. Pier 1 has reported slicing $160 million from its own operations over the past year.
Smith told Pier 1 shareholders today they need to understand “we all have skin in this.” Pier 1’s board members are compensated in Pier 1 stock, he said, and his own compensation is heavily provided by stock.
“We’re all going into this to increase shareholder value,” he said.
Since Pier 1 announced the offer June 6, its stock value has fallen from $7.10 to $5.01 as of mid-day today. Smith told shareholders the board had expected some fluctuation after the announcement, although not quite to the degree that it has.