Case Study

Cost Plus

Cost Plus, Inc. (“Cost Plus”) is a leading value-oriented specialty retailer of unique and authentic home furnishing and entertaining products from all over the world. Products range from dishes, rugs, furniture, candles and glassware to a broad assortment of internationally branded food and beverage items. Cost Plus creates an exciting shopping environment for its customers and markets its offering through its 259 stores in 30 states as well as on its website. The company went public in 1996.

Assignment

Over the last 5 years PJ SOLOMON has advised Cost Plus on a range of assignments

  • 2008: PJ SOLOMON defended Cost Plus from a hostile offer made by Pier One Imports
  • 2009: PJ SOLOMON assisted the Company in its pursuit of financing alternatives, including a potential sale or capital raise, to enhance liquidity
  • 2012: PJ SOLOMON represented Cost Plus in its sale to Bed Bath & Beyond for $22.00 per share.

PJ SOLOMON's Role

During 2009, PJ SOLOMON approached several parties, including Bed Bath & Beyond, about a potential acquisition of or investment in Cost Plus.  At the time, Bed Bath & Beyond was not interested in a transaction; however the financing process precipitated a strategic partnership whereby Bed Bath & Beyond began to sell Cost Plus food and beverage products in select Bed Bath & Beyond stores.  In 2012 when Bed Bath & Beyond contacted Cost Plus to discuss a potential merger, Cost Plus hired PJSC as its exclusive financial advisor.

In this role PJ SOLOMON helped position Cost Plus to receive the best and highest offer, managed an expedited diligence process and negotiated key terms of the transaction.

Results

Bed Bath & Beyond acquired Cost Plus on June 28, 2012 for $22.00 per share, and an implied enterprise value of $683mm.  With an enterprise value of 12.6x LTM EBITDA, the transaction represents one of the highest multiples paid for a specialty retailer in the last 10 years.

Bed Bath & Beyond’s acquisition of Cost Plus provides numerous synergies and growth opportunities for the two companies; in particular, the transaction provides Bed Bath & Beyond critical strategic benefits to help protect its market share and drive growth:

  • Immediate entry into the food and wine business
  • Expertise in and infrastructure to support proprietary product design and development
  • High-margin proprietary product offering in food, beverage, and hard goods

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