Pier 1 Imports adopts ‘poison pill’ to discourage a takeover

FORT WORTH, Texas – A week after a New York hedge fund signaled plans to pressure the struggling retailer for changes, Pier 1 Imports has adopted a “poison pill” plan designed to discourage a takeover.

The shareholder rights plan, announced late Tuesday, gives current shareholders the right to buy shares of junior preferred stock with voting privileges if any person or group acquires 10 percent of the company’s common stock. The maneuver would make a takeover of the retailer more costly.

Last week, Alden Global Capital revealed in a Securities and Exchange Commission filing that it had acquired a 9.5 percent stake in the Fort Worth-based company, with plans to take an active role with the board.

In the filing, Alden Global Capital said it had opened a dialogue with Pier 1’s board on issues including the retailer’s operations, shareholder representation on the board and the search for a new chief executive. Pier 1’s President and CEO Alex Smith, 64, who has led the company since 2007, said earlier this month that he will leave the company at the end of the year.

“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,” Pier 1’s chairman, Terry E. London, said in a statement. “Equally important, the board remains focused on our search for a new CEO to guide and execute the Company’s omni-channel strategy, and is committed to driving increased value for our shareholders.”

Pier 1 plans to report its fiscal second-quarter results after the close of trading today. The company, which has been struggling for the past two years, said preliminary net sales for the quarter had declined by 6.7 percent.