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Things are getting hostile in the furniture business. That is, Pier 1 Imports (NYSE: PIR) has announced a $4 unsolicited bid for rival Cost Plus (NASDAQ: CPWM). That comes to about $88 million. On news of the deal, Cost Plus' shares rose 13% to $3.47.
Although, the folks at Cost Plus are skeptical, calling the deal "highly conditional." Of course, the board will meet to discuss the proposal.
With the recession and real estate bust, it's a good bet we'll see more consolidation in the furniture business. Simply put, it will be a way to cut capacity as well as reduce cost structures.
No doubt, Cost Plus will want to get a higher price, but in light of the challenging environment, that's probably going to be tough. Besides, Cost Plus and Pier 1 have many common shareholders, who may pressure for a transaction. What's more, Cost Plus's "poison pill" will expire on June 30th.
Tom Taulli is the author of various books, including The Complete M&A Handbook
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