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RH-Williams-Sonoma ‘makes even more sense’, says analyst
Jun 23, 2016

BB&T analyst Anthony Chukumba said earlier this week that a Williams-Sonoma acquisition of Restoration Hardware would be sensible, writing, “[We] think the deal makes even more sense now than it did two years ago.” Why? As Investor’s Business Daily reports, there are a number of reasons, among them: RH’s larger showroom stores serve as “an attractive growth vehicle” for Williams-Sonoma; also, the pairing of both brands’ portfolios would provide a “good, better, best” selection of product, from West Elm to Pottery Barn to Restoration Hardware.

According to IBT, Williams-Sonoma shares closed 2.7 percent higher yesterday, while RH’s rose by 7.2 percent (the brand’s stock has dropped approximately 74 percent from its high of 106.49 in November 2015). BB&T estimates that Williams-Sonoma’s acquisition of RH at $50 per share “would be 16 percent and 24.7 percent accretive to WSM’s FY’17 and FY’18 EPS, respectively.”

“While we believe RH management could potentially oppose a transaction, citing the company’s fairly recent glory days, we think continued struggles and/or the involvement of an activist investor could leave it with no choice but to explore a deal,” Chukumba writes.

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