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Pier 1 drops bid to buy Cost Plus

Fort Worth-based Pier 1 Imports on Tuesday said it will no longer pursue competitor Cost Plus World Market.

Pier 1’s stock has not fared well since the home-furnishings retailer announced this month that it wanted to buy the outstanding shares of California-based Cost Plus to create a stronger and more efficient company.

In a statement released late Tuesday afternoon, Alex Smith, Pier 1’s chief executive, said he still believed that a merger would provide significant cost savings and efficiencies, but it would be at the cost of shareholders.

“It is unlikely that we would be able to acquire a majority interest in Cost Plus at a price that would make sense for our shareholders,” he said in the statement.

Smith had described the possible buyout as “a match made in heaven.”

Cost Plus rejected Pier 1’s $88 million offer, saying it was not in its shareholders’ best interest.

The company released a short statement Tuesday after Pier 1’s announcement that it was withdrawing its offer.

“Cost Plus is a terrific franchise and we look forward to continuing with our turnaround plan,” said Dan Gagnier, a company spokesman.

Pier 1 is also in the midst of a turnaround. Wall Street analysts say Pier 1’s stock may still suffer in the weak economy.

Pier 1 shares (ticker: PIR) gained 3 cents Tuesday on the New York Stock Exchange, closing at $4.03, before rising to $4.23 in after-hours trading. Cost Plus shares (CPWM) closed down 4 cents at $3.02 on the Nasdaq.