Pier 1 Imports Adopts a Poison-Pill Measure
September 27 2016 - 7:30PM
Dow Jones News
Pier 1 Imports Inc., under scrutiny of an activist investor,
unveiled steps Tuesday to protect itself from any single
shareholder acquiring a 10% or more stake.
The adoption of a so-called poison pill comes a week after hedge
fund firm Alden Global Capital LLC revealed a 9.5% stake in the
home-goods retailer, which has launched a search for a new chief
executive amid disappointing sales.
According to a prepared statement, the new restriction won't
prevent a takeover "but may cause substantial dilution to anyone
acquiring 10% or more of the company's common stock, which may
block or render more difficult a merger, tender offer or other
business combination."
The agreement attaches to every share of common stock the right
to buy a fraction of junior preferred stock at the price of $17.50.
The preferred shares would carry similar voting terms to common
stock, watering down the influence of any shareholder with a big
stake.
The agreement is extended to shareholders of record at the close
of business Oct. 7 and expires following the company's 2017 annual
shareholder meeting unless amended.
Pier 1 doesn't mention Alden Global in the statement announcing
the new measure. "The board feels it is important to ensure that
all shareholders have the opportunity to realize the long-term
value of the iconic Pier 1 Imports brand, and to guard against
coercive or unfair tactics to gain control of the company without
paying all shareholders an appropriate premium," said Chairman
Terry London, in the statement.
Alden Global and Pier 1 didn't immediately respond to requests
for comment.
Last week in a regulatory filing, Alden said it has been in
contact with Pier 1 management regarding shareholder representation
to the board, the company's recent financial results and the search
for a new chief executive. Alden said it intends to continue the
communication and that it believes that Pier 1 is "at a critical
juncture."
Alden said it obtained the stake, composed of some 7.9 million
shares outstanding, because it believed the stock was "undervalued
and represented an attractive investment opportunity." The stake
places Alden second only to T. Rowe Price Associates Inc., which
has an 11.6% stake, among institutional investors in Pier 1,
according to FactSet data.
Any shareholder with a 10% or higher stake gathered before the
new agreement, like T. Rowe Price, wouldn't trigger the new measure
unless an additional 1% of shares is obtained, Pier 1 said in its
Tuesday statement.
Earlier this month, Pier 1 said that Chief Executive Alex Smith
was slated to leave the company at the end of the year, and a
search for his replacement had been launched. The announcement came
on the same day that the chain reported disappointing preliminary
results for the quarter ended in August. It said net sales declined
about 6.7% from the same period a year ago, with comparable sales
falling 4.3%, much more than the company's forecast of a range of a
1% loss and a 1% climb, respectively. Analysts cited by FactSet
expected comparable sales to fall 0.4%.
Write to Ezequiel Minaya at ezequiel.minaya@wsj.com
(END) Dow Jones Newswires
September 27, 2016 19:15 ET (23:15 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
Pier 1 Imports (NYSE:PIR)
Historical Stock Chart
From Mar 2024 to Apr 2024
Pier 1 Imports (NYSE:PIR)
Historical Stock Chart
From Apr 2023 to Apr 2024