Bassett Furniture rejects CSC Generation's $21-a-share offer as too cheap (updated)

Bassett Furniture Industries

11/10/2022 22:08

(Updates with Bassett Furniture reaction, stock price)
    By Svea Herbst-Bayliss
       NEW YORK, Oct 11 (Reuters) - Retail sector holding
company CSC Generation Inc offered to pay $191 million for
Bassett Furniture  BSET.O  but the home furnishings retailer
rejected the bid, which represented a 27% premium, as being too
cheap.
    CSC Generation, one of Bassett's top 10 shareholders with a
2% stake at the end of June, said it would buy Bassett for $21 a
share in cash late last month, marking the firm's second
overture to buy the company. CSC previously made a bid in June. 
    "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," the
letter said. CSC general counsel Elizabeth Brown wrote the
letter dated Oct. 11 to the Bassett board.
    Bassett's share price has fallen roughly 10% in the last 52
weeks and has lost almost 60% of its value in the last five
years, prompting CSC, whose brands include Sur La Table and One
Kings Lane, to approach the company.
    News of the offer, first reported by Reuters on Tuesday,
helped push Bassett's stock price higher to end up 8% at $17.83.
    "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," Brown added in the letter.
    CSC has spent the last several months trying to engage with
Bassett's board, Brown said in the letter.
    But Bassett's board of directors late Tuesday rejected CSC's
offer as being too cheap and "highly opportunistic" against the
backdrop of a tumbling market. "CSC's effort to make the
proposal public does not change the fact that it undervalues the
company," Robert Spilman, chief executive officer and board
chairman, said in a statement.
    CSC Generation was founded six years ago by Justin Yoshimura
and has used its digital capabilities and improved operations at
store and catalog retailers to build methods of shopping that
include online, in-store and phone purchases. 
    The investor had written in the letter that it wanted to
receive a fair evaluation of its offer and said it would "take
any action necessary" to achieve that goal. Last month, it was
rebuffed by smaller furniture company Flexsteel Industries
 FLXS.O , which it wanted to buy and whose stock price has
tumbled more than 10% since the company announced plans to
reject CSC.
    Mergers and acquisition activity has slowed as financing
conditions have tightened in the wake of high inflation, rising
interest rates and a more uncertain outlook for growth. Global
dealmaking slowed to 210 deals completed in the third quarter,
compared with 264 deals in the same quarter a year ago,
according to data from consulting firm Willis Towers Watson.
 (Reporting by Svea Herbst-Bayliss; Editing by Uttaresh.V and
Lisa Shumaker)
 ((svea.herbst@thomsonreuters.com; +617 856 4331; Reuters
Messaging: svea.herbst.thomsonreuters.com@reuters.net))