Bed, Bath & Beyond to buy Cost Plus
Eve Mitchell / Contra Costa Times
Oakland-based Cost Plus, a retail chain that got its start more than 50 years ago selling rattan furniture and baskets from a San Francisco pier, on Wednesday was acquired by Bed Bath & Beyond for about $500 million in cash.
All Cost Plus stores will remain open, and no layoffs are expected as a result of the sale, Cost Plus said in a letter to employees Wednesday. The name also will remain the same.
The deal will help improve Bed, Bath & Beyond’s bottom line while leading to more Cost Plus store openings, said Anthony Chukumba, a senior research analyst at BB&T Capital Markets.
“(Cost Plus) has managed a multiyear turnaround,” he said. “And that’s something that’s very attractive for Bed, Bath & Beyond.”
News of the deal sent Cost Plus stock to its highest price since August 2005, closing Wednesday at $21.93. Under terms of the sale, Bed Bath & Beyond will pay $22 for each Cost Plus share, which amounts to a 22 percent premium over the closing stock price of $17.99 on Tuesday.
The deal, which has been approved by the board of directors of both companies, is expected to close by late August.
Cost Plus has long been a fixture in Oakland and the Bay Area. The first store opened in 1958 in the Fisherman’s Wharf area of San Francisco. The flagship store, which is still there, opened not long after company founder William Amthor, a San Francisco furniture store owner who loved to travel, started selling unique items he founds on his trips off a city pier.
Over the past two years, customer spending and sales volume has climbed as Cost Plus worked to attract more customers who are looking for value when they shop. For fiscal year 2011, which ended Jan. 28, Cost Plus posted $946 million in net sales, a 5.2 percent increase from the previous year.
Jeff Green, a Phoenix-based retail marketing consultant, said the deal makes sense because the two retailers are complementary.
“They are not competitors. Bed, Bath & Beyond focuses on bath and kitchen while Cost Plus has very value-oriented specialty products and furthermore their price points are actually a bit different,” he said.