Pier 1 Sells Ft. Worth HQ, Eyes Cost Plus

With the impending closing of the sale-leaseback of its corporate headquarters, Ft. Worth-based retailer Pier 1 Imports Inc. has set its sights on acquiring California-based Cost Plus Inc.Pier 1 executives sent a letter to the board of directors of Cost Plus on Monday with a proposal to acquire the outstanding shares of Cost Plus common stock in a stock-for-stock transaction. The deal could be completed in the third quarter of this year, according to Pier 1 information.Under the terms of the proposal, Pier 1 would issue 0.6 shares of its common stock for each share of Cost Plus common stock. Based on the closing prices of Pier 1 Imports and Cost Plus on June 6, the proposed exchange ratio implies a value of $4 for each share of Cost Plus common stock. The offer represents a premium of about 31 percent above the Cost Plus closing price on June 6, and a premium of approximately 34 percent over the average closing price of Cost Plus shares for the last 30 trading days.The attempted acquisition of Cost Plus is designed to create value for both companies, according to Pier 1, which has been struggling for several years but posted its first net income from continuing operations in the first quarter of this year, with a gain of $13.7 million, versus a net loss of $58.7 million in the first quarter of 2007. On March 31, Pier 1 announced its agreement to sell its corporate headquarters facility (pictured) to Chesapeake Energy Corp. to recoup the firm’s investment and minimize ongoing costs while finding a buyer that would agree to a leasing relationship, according to company information. Financials on the transaction were not disclosed.Chesapeake purchased the building to accommodate further growth of its Barnett Shale district headquarters and its North Texas employees. Pier 1 has maintained its headquarters in the building since completion of construction in 2004. The company plans to retain occupancy in approximately 250,000 square feet of the building, and expects to enter into a seven-year lease agreement with Chesapeake at closing. The 460,000-square foot, 20-story building is located on 14.7 acres of land on the outskirts of Downtown Fort Worth. It was one of the first key developments of the city’s ongoing Trinity Riverfront Project, a landmark improvement project in Fort Worth.”We closed the deal on June 9 and will move in around mid-July,” a Chesapeake spokesperson told CPN today. “We have offices in Downtown Fort Worth, but we’re outgrowing that space. This building was for sale and it meets our needs. It is a win-win situation for Pier 1, too, because we’re leasing back part of our building to them.” Chesapeake is currently occupying space in the D.R. Horton Tower in Fort Worth. Chesapeake is an oil and natural gas firm that operates approximately 800 Barnett Shale wells, currently producing approximately 450 million cubic feet of net natural gas equivalent per day, which represents approximately 20 percent of the company’s total production.