Reiterates Compelling Nature of Proposed Transaction and Value
Proposition to Cost Plus Shareholders
FORT WORTH, Texas--(BUSINESS WIRE)--June 16, 2008--Pier 1 Imports,
Inc. (NYSE: PIR) today issued the following statement in response to
the announcement by Cost Plus, Inc. (NASDAQ: CPWM) regarding Pier 1
Imports' proposal to acquire all the outstanding shares of Cost Plus.
"We are disappointed in the Cost Plus Board's recommendation,
which fails to recognize the significant value inherent in a
combination of our two companies," said Alex W. Smith, President and
Chief Executive Officer of Pier 1 Imports. "Our strategic
stock-for-stock proposal is extremely compelling, and we believe that
it would create significant value for the stakeholders of both
companies. We are surprised that the Cost Plus Board determined that
our proposal was not in the best interests of the Cost Plus
shareholders - given that the Cost Plus Board and management have made
no effort to discuss with us the potential and benefits of a mutually
acceptable transaction. In addition, as originally outlined, our
proposal is subject to only limited conditions that are customary for
transactions of this type, which are confirmatory due diligence, the
negotiation of a definitive acquisition agreement and the receipt of
all necessary shareholder and regulatory approvals. Nevertheless, we
intend to work directly with the shareholders of Cost Plus to make
this transaction a reality."
Pier 1 Imports believes that its proposal provides full and fair
value to Cost Plus shareholders and is compelling for many reasons,
including:
-- Significant Synergies. Over the last year, management of
Pier 1 Imports has achieved approximately $160 million in cost
savings as a result of its efforts to reduce marketing
expenses, payroll and other general administrative costs.
Based on publicly available information, and Pier 1 Imports'
expectation of the benefits of a Pier 1 Imports-Cost Plus
combination, Pier 1 Imports believes that it can achieve
additional cost savings in the range of 5% of sales of Cost
Plus (approximately $50 million), which is consistent with
comparable retail transactions. Estimates of these potential
cost synergies are anticipated to come from organizational
efficiencies in the supply chain management, shared services,
store operations and other general administrative costs. In
addition, Pier 1 Imports believes its committed $450 million
asset-based lending facility will provide the combined company
sufficient operational liquidity to execute effectively,
especially in this difficult retail environment.
-- Compelling Upside of Combination. By virtue of Pier 1 Imports'
stock-for-stock transaction proposal, Cost Plus shareholders
would have the opportunity to participate in the significant
potential upside of the combined company. Pier 1 Imports and
Cost Plus are highly complementary given their similar
customer bases and broadly similar business models, but
distinct market positions. The combination is expected to
result in improvements in Cost Plus' operating margins,
providing an opportunity for Cost Plus shareholders not only
to participate in the turnaround of Cost Plus' business, but
also to reap the benefits of a larger, more efficient company
that has the potential to once again achieve the companies'
historically high operating margins. In addition, the
combination would result in improved operational liquidity for
Cost Plus, as well as a more liquid and active trading market
for Cost Plus shares.
-- Pier 1 Imports' Solid Execution Track Record. Pier 1 Imports
has made significant progress since its current management
team was augmented in 2007, while Cost Plus results have
continued to deteriorate through multiple management changes
to date. As a result, Pier 1 Imports believes that the Cost
Plus stock price has declined precipitously as it has
struggled unsuccessfully to restructure its business. In
contrast, the Pier 1 Imports stock has retained its value in
the face of the same challenging environment. In fact, over
the last six months, and prior to Pier 1 Imports' proposal to
acquire Cost Plus, the Pier 1 Imports stock price has
appreciated 64.7%, while Cost Plus' stock price has declined
13.1%. With experience operating multi-divisional companies,
the Pier 1 Imports senior management team is well equipped to
implement a speedy turnaround at Cost Plus.
On June 9, 2008, Pier 1 Imports announced its proposal to acquire
all the outstanding shares of Cost Plus common stock in a strategic
stock-for-stock transaction. Under the terms of the proposal, Pier 1
Imports would issue 0.6000 shares of its common stock for each share
of Cost Plus common stock. Based on the closing prices of Pier 1
Imports and Cost Plus on June 6, 2008, the proposed exchange ratio
implied a value of $4.00 for each share of Cost Plus common stock. The
proposal represented a premium of approximately 31% over the Cost Plus
closing price on June 6, 2008.
JPMorgan is acting as financial advisor to Pier 1 Imports, and
Gibson, Dunn & Crutcher LLP and Bracewell & Giuliani LLP are acting as
legal counsel.
About Pier 1 Imports, Inc.
Pier 1 Imports is the original global importer and is North
America's largest specialty retailer of imported decorative home
furnishings and gifts. Additional information about Pier 1 Imports is
available on www.pier1.com.
Safe Harbor Statement
This communication does not constitute an offer to sell or the
solicitation of an offer to buy any securities, or a solicitation of
any vote or approval. If a transaction is agreed upon or an offer to
exchange shares of Pier 1 Imports, Inc.'s common stock for shares of
Cost Plus, Inc.'s common stock is commenced, Pier 1 Imports will file
any forms, notices and other relevant documents concerning such
proposed transaction with the SEC as required under state and federal
law. INVESTORS AND OTHER SECURITY HOLDERS OF COST PLUS ARE URGED TO
READ ANY SUCH FORMS, NOTICES AND OTHER DOCUMENTS IF AND WHEN THEY
BECOME AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION.
You will be able to obtain any such forms, notices or other
documents (if and when they become available) and any other documents
filed with the SEC free of charge at the SEC's website, www.sec.gov.
Free copies of any such forms, notices or other documents can also be
obtained by directing a request to the Investor Relations Department,
Pier 1 Imports, Inc., 100 Pier 1 Place, Fort Worth, Texas 76102.
Pier 1 Imports and its directors and executive officers and other
persons may be deemed to be participants in the solicitation of
proxies in respect of the proposed transaction. Information regarding
the directors and executive officers of Pier 1 Imports is available in
its Annual Report on Form 10 K for the year ended March 1, 2008, which
was filed with the SEC on May 7, 2008, and its proxy statement for its
2008 annual meeting of shareholders, which was filed with the SEC on
May 9, 2008. Other information regarding participants in any proxy
solicitation and a description of their direct and indirect interests,
by security holdings or otherwise, will be contained in any
prospectus/proxy statement filed in connection with a proposed
transaction.
This communication contains "forward-looking statements" within
the meaning of the "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995, as amended, and the rules promulgated
pursuant to the Securities Act of 1933, as amended, and the Securities
Exchange Act of 1934, as amended. Generally, the words "will," "may,"
"should," "continue," "believes," "expects," "intends," "anticipates"
or similar expressions identify forward-looking statements. Because
forward-looking statements are subject to risks and uncertainties,
actual results may differ materially from those expressed in or
implied by such forward-looking statements. Factors that could cause
actual results to differ materially from those contemplated by the
forward-looking statements include, among others, the following
factors: cost savings expected to result from the proposed acquisition
may not be fully realized or realized within the expected time frame;
operating results following the proposed acquisition may be lower than
expected; competitive pressure among specialty home furnishings
retailers may increase significantly; costs or difficulties related to
the integration of the businesses of Pier 1 Imports and Cost Plus may
be greater than expected; changes in the market price of Pier 1
Imports' common stock between the date hereof and the date that the
value of Pier 1 Imports' common stock is determined for purchase
accounting purposes could result in the recognition of higher levels
of goodwill and other intangible assets; general economic conditions,
whether nationally or in the market areas in which Pier 1 Imports and
Cost Plus conduct business, may be less favorable than expected; and
adverse changes may occur in the securities markets. The businesses of
Pier 1 Imports and Cost Plus are also subject to a number of other
risks that are set forth in the "Risk Factors," "Legal Proceedings"
and "Management's Discussion and Analysis of Financial Condition and
Results of Operations" sections of, and elsewhere in, the SEC filings
of Pier 1 Imports, Inc. and Cost Plus, Inc. copies of which may be
obtained by contacting the investor relations departments of each
company or from their respective websites: www.pier1.com and
www.worldmarket.com. Many of the factors that will determine the
outcome of the subject matter of this communication are beyond Pier 1
Imports' and Cost Plus' ability to control or predict. All information
in this communication is as of June 16, 2008. Pier 1 Imports
undertakes no obligation to release publicly the results of any
revisions to these forward-looking statements that may be made to
reflect events or circumstances after the date hereof or to reflect
the occurrence of unanticipated events.
CONTACT:
Pier 1 Imports, Inc.
Cary Turner, 817-252-8400
or
For Media:
Joele Frank, Wilkinson Brimmer Katcher,
Jamie Moser, Ariel LeBoff, 212-355-4449
SOURCE:
Pier 1 Imports, Inc.
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