Skip to main content

Bassett ‘Unanimously’ Rejects Takeover Offer

Bassett Furniture clapped back at a pair of unsolicited takeover offers that “substantially undervalue” the furniture chain, it said Tuesday.

The war of words escalated when the Bassett, Va.-based furniture manufacturer and retailer publicly responded to investment platform CSC Generation Holdings proposal’s to acquire 100 percent of the outstanding shares of common stock it doesn’t own at a price equal to $21 per share in cash.

Because Bassett didn’t respond to previous acquisition proposals submitted by CSC on June 30 and Sept. 26, the investment and holding firm decided to make its offer public.

“We believe our proposal delivers an attractive opportunity for shareholders to obtain immediate liquidity at a full value that exceeds what the company can be expected to achieve in the coming years if it remains on its current standalone course in the public market,” said Elizabeth Brown, CSC general counsel and chief administration officer in the proposal. “We also believe our proposal has only become more appealing as the company’s stock price continues to languish.”

Bassett chairman and CEO Robert H. Spilman, Jr., however, gave CSC the cold shoulder, saying the offer represents a far cry from what the company’s really worth.

“CSC’s effort to make the proposal public does not change the fact that it undervalues the company,” he said in a statement. “The Board, with the assistance of independent legal and financial advisors, carefully considered both offers as well as the comments related to CSC’s digital first strategy and determined that the proposals substantially undervalue the company, are highly opportunistic given recent turmoil in the stock markets and not in the best interests of the company and its numerous stakeholders.”

Related Stories

The proposal references Bassett’s share price of $16.51 at the close of Oct. 10, noting the offer represents a 27 percent premium over that selling price. Since the proposal was made public, Bassett’s stock price has increased to nearly $18 per share.

CSC Generation—which owns several home goods brands such as One Kings Lane, Z Gallerie and Sur La Table—is one of Bassett’s top 10 shareholders with a 2 percent stake as of the end of June.

The Bassett CEO went on to say that after CSC bought and sold a large number of the company’s shares earlier this year, the retailer “proactively engaged” with the investor since it “became aware of CSC’s investment.”

“During those discussions, it was of particular interest to us that CSC founder, Justin Yoshimura, first broached the idea of a commercial partnership with the company and admitted that the category of retail which Bassett operates in was particularly difficult for them and their experience with Sur La Table is not entirely transferable to furniture,” he continued. “This lack of understanding of our business, the necessity of our omnichannel strategy and the multitude of highly collaborative relationships and partnerships that Bassett has successfully cultivated over 120 years reinforced our concerns about CSC’s approach.”

According to the proposal, CSC said the transaction would not be contingent on obtaining financing and the company is confident it has enough cash on hand and external financing from existing lenders.

Founded in 1902, Bassett is one of Virginia’s oldest furniture manufacturers and operates 92 company- and licensee-owned stores in 33 states and Puerto Rico. In September, the company acquired Canadian e-commerce furniture retailer Noa Home, Inc., with the intention of expanding its e-commerce capabilities and furthering its reach to countries such as Canada, Australia, Singapore and the United Kingdom, where Noa has operations.

Noa’s purchase price included cash payments of $2.0 million (Canadian) paid to Kopek and Renaud, along with approximately $5.7 million (Canadian) for the repayment of existing debt. Noa’s co-founders will also have the opportunity to receive additional annual cash payments of $1.33 million (Canadian) per year for the following three fiscal years based on established increases in net revenues and achieving certain internal EBITDA goals.

The deal came after Basset in March finalized the $87 million sale that gave most of its Zenith Freight Lines assets to J.B. Hunt, with the trucking giant continuing to offer the retailer its logistics services.

During its third-quarter earnings call on September 30, Bassett reported $118 million in third-quarter sales, a 12.5 percent increase over the same quarter last year, but a $10 million decline from the second quarter of 2022.

CSC Generation’s proposal acknowledged Bassett’s efforts to improve business, but suggested the company as it stands will be unable to see significant growth, particularly without a solid e-commerce strategy.

“Based on our experience and today’s post-pandemic environment, we believe transformation is needed at Bassett and that a successful outcome can only be executed as a private business with the additional resources of a digitally native owner like CSC,” Brown said in the proposal. “We believe that the company’s stock has traded at a substantial discount to its true value for the past four years and will continue to trade below its intrinsic value if it remains publicly listed due to Wall Street’s lack of interest in low growth, offline retail.

“While we commend management’s past efforts to adapt to the rapidly changing environment, we believe there is more that must be done in order to evolve the business to meet the needs of today’s digitally-native consumer.”

Bassett did not respond to a request for comment.