Pier
1 says it's talking to investor - News of possible deal
with Icelandic company energizes stock
Pier 1 Imports Inc. said Thursday that it is discussing
a "possible transaction" with an Icelandic investor
who has a history of buying and operating home furnishing
chains.
The Fort Worth-based retailer, which has been struggling
with declining sales, didn't disclose the nature of the
negotiations.
But it is likely that the chain of more than 1,000 stores
is considering a leveraged buyout or some other financial
arrangement with Lagerinn ehf, an Iceland-based company
owned by Jakup a Dul Jacobsen.
Lagerinn is already one of Pier 1's largest shareholders.
It controls 9.82 percent of Pier 1 stock.
In a Securities and Exchange Commission filing Thursday,
Pier 1 said it had entered into a confidentiality agreement
with Lagerinn on Tuesday.
Mr. Jacobsen said in the filing that he is considering
a "possible negotiated transaction."
Pier 1's stock price spiked more than 10 percent on the
news Thursday in heavy trading. It closed up 54 cents,
or 8 percent, at $7.34 a share, on three times the average
daily volume.
The agreement includes a six-month standstill period,
in which Mr. Jacobsen agrees not to acquire more shares
without approval from Pier 1's board.
Lagerinn has contacted and held discussions with Pier
1's management and may contact board members and management
"again in the future to discuss a possible, negotiated
business transaction," the filing said.
"No assurances can be given that any possible negotiated
business transaction involving" Pier 1 "will
be proposed, or if proposed, consummated," the document
said.
A spokesman for Mr. Jacobsen said he couldn't comment.
Pier 1 didn't respond.
Not the first
Pier 1 isn't Mr. Jacobsen's first foray into home furnishing
stores or into the U.S. market.
Mr. Jacobsen franchises Jysk stores, a Denmark-based
Ikea look-alike chain of more than 1,000 home furnishings
stores. He opened his first Jysk in Canada in 1996 and
now has more than 25 stores there.
Earlier this year, Mr. Jacobsen's company paid Pier 1
$15 million for its U.K.-based Pier Retail Group of 40
stores.
Last year, he acquired a stake in Linens-N-Things before
the New Jersey home furnishings chain was acquired by
private equity group Apollo Management.
Retirement rumors
Mr. Jacobson's investment in Pier 1, disclosed in February,
set off rumors that Marvin J. Girouard, the chain's CEO
since 1999 and a 30-year veteran of the company, would
be retiring.
Mr. Girouard, 66, said at the company's annual meeting
in July that he wasn't planning to leave yet but the board
considered succession planning regularly.
Last week, Pier 1 reported a wider-than-expected second-quarter
loss. Standard & Poor's and Moody's Investors Service
both downgraded Pier 1's credit rating this week.
Several recent new strategies -- including launching
a catalog operation last year and modernizing its furniture
and accessories -- have failed to lift sales.
Sales have declined for more than two years as competition
accelerated from specialty chains and discounters Target
and Wal-Mart.
In May, Pier 1 hired J.P. Morgan to help it evaluate
strategic alternatives. Last month, it sold its credit
card business to J.P. Morgan Chase for $155 million.
Wall Street has been getting impatient.
After the disappointing earnings last week, Goldman Sachs
analysts said the chain "now appears somewhat rudderless
as management continues to look for a defensible merchandising
niche."
Mr. Girouard said last week that the chain would maintain
some of its new "modern craftsman" and "Loft
21" lines but that it would also shift the store's
merchandise mix to more traditional Pier 1 items with
lower prices and more promotions.
