Oppenheimer Sees A Number Of Reasons Williams-Sonoma/Restoration Hardware Deal Could Make Sense


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Following news of Restoration Hardware Holdings, Inc.'s (NYSE: RH) possible acquisition of Williams-Sonoma, Inc. (NYSE: WSM), shares of both companies are trading higher.

"Today by no means 
represents the first time that the market has speculated that RH and
 WSM could combine," said Oppenheimer analyst Brian Nagel. "As we have indicated in the past, at least on paper
 we see a number of reasons that such a combination could make sense.
"

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The firm maintains skeptical of the acquisition, however, and recommends that investors "sell into today's strength."

Adding Restoration Hardware to the company portfolio would provide Williams-Sonoma with a "new, higher-end" brand, according to the analyst, who added that Restoration Hardware could benefit from the existing supply chain infrastructure that Williams-Sonoma has to offer.

"All that said, we 
have heard for a long time from managements that a history of "bad 
blood" and an entrenched competitive spirit between the chains is apt
 to prevent any type of strategic combination," said Nagel.

Oppenheimer maintained a Hold rating for Restoration Hardware and a Buy for Williams-Sonoma.


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Posted In: Analyst ColorAnalyst RatingsBrian NagelOppenheimer