Ikea, the Swedish chain of contemporary furniture outlets, will buy Stor Furnishings International Inc. for $20 million in the latest example of industry consolidation, company officials said.
Ikea said Tuesday that it will convert all four of Stor's outlets -- in Houston and Los Angeles-area cities -- to Ikea stores before the end of 1992, eliminating the chain's largest Southern California rival in the ready-to-assemble contemporary furniture market.
Stor president and co-founder Jim Stadtlander said that the companies have not yet discussed possible staff cutbacks. Stor has 550 employees, 450 in the Los Angeles-area stores.
Company executives said that Stor outlets will operate as usual during the merger procedure.
"Ikea was contacted several months ago by Stor, to either finance
or acquire Stor," said Goran Carstedt, president of Ikea U.S. Inc.
"Since Ikea had already planned to expand further in the greater Los Angeles market, this opportunity was approached with great interest," he said in a statement.
The deal comes on the heels of a series of contractions in the Southern California furniture retailing industry. In the past two months RB Furniture Inc. and Ortho Mattress Inc. have filed for Chapter 11 bankruptcy protection, and Barker Bros. has filed for Chapter 7 liquidation.
"The weaker ones are falling by the wayside," said Art Sherman, chairman of the Home Furnishings Representatives Guild of Southern California. "So have the ones that have overextended themselves."
Under terms of the deal, Ikea will make a cash tender offer of $3.10 a share for all Stor common stock and non-voting common stock starting within five business days.
Completion of the deal hinges on, among others, the tendering of at
least 90 percent of outstanding common stock and all of the non-voting common stock. Stor stock closed Tuesday at 2 15/16ths up 15/16ths.
The deal will boost the number of U.S. Ikea stores to four West Coast outlets and seven in the Northeast and Texas. The chain, with 100 stores in 25 countries and 1991 sales of $3.8 billion, has a 240,000-square-foot store in the Los Angeles-area city of Burbank and plans to open new stores in Southern California.
"It means that now the bigger of the two gladiators is the only one left," said Lester Craft Jr., editor of trade publication Furniture/Today in High Point, N.C.
Stor, which opened its first outlet in 1987, grew to become the nation's 34th largest furniture retailer with sales of $72.2 million in 1990, according to Furniture/Today. But the retailer has not been profitable since its inception, having lost $34.1 million up to the second fiscal quarter ended Oct. 11, 1991.