Bed Bath & Beyond Inc (NASDAQ:BBBY) has announced that it will acquire the US retailer Cost Plus Inc. (NASDAQ:CPWM) in a deal worth $495 million. The offer amounts to a sum of $22 for each share held in the home furnishing retailer. The transaction will apparently be an all cash afffair betweeen Bed Bath & Beyond and the shareholders of Cost Plus.
Cost Plus is a retail business involved in home furnishing and decoration. The firm operates in the main in the United States but also has business outside of North America. The firm’s share price was trading very close to the $22 buyout price in the first hours of trading this morning. the company was up over 21% to 21.88.
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Two of the major share holders in the firm, Red Mountain Capital Partners and Stephens Investment Holdings have already agreed to tender their combined 26% of shares in the company.
This is not the first coordination of the two companies though this is certainly the ultimate move in that direction. The firms have worked together on branding before and Cost plus has in the past implemented a store within a store platform in cost plus. The ties developed between the two enterprises may have influenced the decision to purchase and should make the transition easier.
Because of the past cooperation between the companies this may not be a simple acquisition of a brand for Bed Bath & Beyond. The company might be expected to continue its internal brand cooperation even as Cost Plus becomes an internal business.
Bed Bath & Beyond is one of the largest businesses in the home furnishings retail sector in North America. The company has a market capitalization of $16 billion. It operates stores under a variety of brand names including its original Bed Bath & Beyond product.
Both companies will hope that increasing consumer confidence and a more secure and liquid credit situation will increase demand for their products. Bed Bath & Beyond offered guidance on their revenues for the firs quarter of 2012 that would see the company sell 4-6% more than in the same period last year. The firm is expecting earnings per share in the region of $3.50 for the full 2012 fiscal year.
Bed Bath and Beyond’s shares were up slightly today after the news of the acquisition broke. The company’s stock was trading at 68.72 up about two thirds of a percent from this morning’s opening price.