Pier 1 has made a bid to buy rival Cost Plus World Market, the Fort Worth-based retailer announced Monday.
The company, which has been attempting a turnaround since last year after months of falling sales, now contends that its position has strengthened while Cost Plus is deteriorating.
Its offer amounts to $4 per Cost Plus share, representing a premium of about 31 percent over the stock's most recent closing price.
"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," Alex Smith, Pier 1's chief executive, said in a statement. "We are confident that combining our two companies would create a stronger and more competitive company that is better positioned for future growth."
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Cost Plus issued a statement Monday calling the unsolicited proposal "non-binding" and "highly conditional," but said its board would meet to discuss the deal. The California-based company operates 292 stores in 33 states.
At Pier 1, losses have declined in recent quarters, and sales were up in December for the first time in almost two years.
The company has been focusing lately on a new merchandise mix that includes toys, soap and other inexpensive gifts to reduce its reliance on sales of high-ticket furniture. It has trimmed payroll, halted online sales and television ads, and closed clearance outlets and children's stores.
Most recently, in April, Pier 1 announced the $104 million sale of its sleek headquarters on the edge of downtown Fort Worth.