Bed Bath & Beyond to buy Cost Plus for $495M
NEW YORK (AP) — Bed Bath & Beyond Inc. said Wednesday it agreed to buy smaller home goods retailer Cost Plus Inc. for about $495 million, following a collaboration that put a specialty food department in some Bed Bath & Beyond stores showed promise.
Bed Bath & Beyond said Wednesday that it will pay $22 for each Cost Plus share, a 22 percent premium to its closing price on Tuesday. Shares of Oakland, Calif.-based Cost Plus rose $3.90, or 21.7 percent, to $21.89 in morning trading.
Cost Plus, which operates stores under the names World Market and Cost Plus World Market, currently has about 22.5 million outstanding shares, according to FactSet.
Cost Plus and Bed Bath & Beyond had been testing a specialty food department at some Bed Bath & Beyond stores for the past year and a half. The tests showed the departments "could help generate in-store traffic and sharpen the edge against online retailers," Cost Plus CEO Barry Feld said in a letter to employees on the Cost Plus Web site.
So called "big-box" stores of all stripes are facing stepped up competition from discounters and online retailers.
"Our successful merchandising and product collaborations over the last two years have demonstrated that our organizations work well together and that we can make key contributions to the continued success of the combined company," Feld added in a statement. No job cuts or store closures are expected.
Cost Plus started in 1958 as one store selling imported goods called Cost Plus World Market in San Francisco's Fisherman's Wharf. There are now 259 stores worldwide.
Bed Bath & Beyond was founded in 1971 and operates more than 1,000 stores under its own name as well as Christmas Tree Shops, Harmon, Harmon Face Values, and BuyBuy Baby in the U.S. It operates Home & More stores via a joint venture in Mexico.
In its most recent fiscal year net income climbed 25 percent on an 8 percent rise in revenue to $9.5 billion.
Both companies' boards have unanimously approved the deal, which is expected to close during Bed Bath & Beyond's fiscal second quarter, which ends in August. The transaction will be funded with available cash.
Shares of Union, N.J.-based Bed Bath & Beyond rose 50 cents to $68.73 in morning trading.
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AP Business Writer Michelle Chapman contributed to this report.
