Bed, Bath & Beyond Wins Approval of Settlement

SAN JOSE, Calif. (CN) - Bed, Bath & Beyond can settle claims that it paid too little to acquire Cost Plus World Market, a federal judge ruled.

Cost Plus shareholders sued the company and its new owner last year, claiming that Cost Plus sold itself for way below its market value at $22 per share, or $494 million.

Oakland-based Cost Plus operates 263 stores in 30 states and had posted year-over-year revenue gains for the two years prior to the merger. Shareholders led by Irene Dixon accused the companies of intentionally undervaluing Cost Plus, withholding key information that prevented shareholders from making an informed vote on the merger, and failing to look at the bids of other prospective buyers.

Finding it unlikely that the shareholders would prevail on their federal securities and state fiduciary duty claims, U.S. District Judge Lucy Koh declined to block the merger in June 2012. Settlement talks ensued, with the parties announcing they had reached a tentative agreement earlier this year.

Aside from class certification, a stipulation of the settlement dated February 2013 notes an incentive award of $2,800 for intervenor plaintiff Gary Ogurkiewicz as the only other relief.

The defendants will also pay $375,000 to the plaintiffs' counsel: Pomerantz Grossman Hufford Dahlstrom & Gross; Berman De Valerio; Brower Piven; and Brodsky & Smith.

Koh granted the settlement preliminary approval on Thursday.

Cost Plus must begin mailing class action settlement notices immediately to all shareholders that held its 22.4 million shares of stock between May 9, 2012, and June 29, 2012, according to the eight-page scheduling order.

Koh will hold a final approval hearing on Dec. 5 to determine the "fairness, reasonableness and adequacy" of the settlement and whether to unconditionally certify the class without opt-out rights for settlement purposes.

Any shareholders objecting to the settlement must file their written objections by Nov. 27 or appear at the hearing. Otherwise, they forfeit the right to take future action in the matter, Koh said.

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