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| Pep Boys to be Sold for $1 Billion |
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 by: iradiotom - Philadelphia, PA
started: 01/30/12 11:52 am | updated: 01/30/12 11:52 am |
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Manny, Moe and Jack are getting new bosses. Pep Boys has agreed to be purchased by private investor, the Gores Group.
The Philadelphia-based auto parts and service retailer said the deal is for $15 per share, a 24 percent premium over Friday's closing price. The enterprise value of the deal is $1 billion, Pep Boys said.
According to a Gores Group spokesperson, “For over 90 years, Pep Boys has been the leading automotive service and retail chain and we look forward to supporting the Company’s continued growth and expansion with our substantial equity resources.â€
Press Release:
The Pep Boys – Manny, Moe & Jack (NYSE: PBY), the nation’s leading automotive aftermarket service and retail chain, today announced that it has entered into a definitive merger agreement under which it will be acquired by The Gores Group, one of the nation’s leading investment firms, led by founder and CEO, Alec Gores. Total enterprise value of the transaction is approximately $1.0 billion.
Under the terms of the merger agreement, The Gores Group will acquire all the outstanding common shares of Pep Boys for $15.00 per share in cash. This represents a premium of 24% percent over Pep Boys’ closing price of $12.08 on January 27, 2012 and a premium of 36% percent over Pep Boys’ volume weighted average closing price over the last 30 trading days.
Pep Boys’ Board of Directors has unanimously approved the merger agreement and recommended that Pep Boys’ shareholders approve the transaction. It is expected that Mike Odell, Pep Boys’ President & Chief Executive Officer and other members of the senior management team will continue in their roles with the Company after the completion of the transaction.
“Partnering with The Gores Group delivers a significant premium for Pep Boys’ shareholders and ensures a strong foundation for us to continue our expansion,†said Mr. Odell. “Our Board firmly believes that this transaction is in the best interests of all of our stakeholders and delivers an ongoing commitment to excellence for our customers and employees.â€
Lee Bird, Managing Director of Operations and Consumer Practice Leader at The Gores Group, said, “Pep Boys’ strong brand awareness and management’s strategy to be the automotive solutions provider of choice for the value-oriented customer positions Pep Boys for growth. We are excited to help Pep Boys build on this vision and enable the Company to take the brand and business to the next level by effectively scaling its powerful differentiated service platform.â€
Ryan Wald, Managing Director of Mergers & Acquisitions at The Gores Group, said, “For over 90 years, Pep Boys has been the leading automotive service and retail chain and we look forward to supporting the Company’s continued growth and expansion with our substantial equity resources.â€
The agreement provides for a 45-day "go-shop" period and contains customary closing conditions, including receiving the approval of Pep Boys’ shareholders and all applicable regulatory approvals. A special meeting of Pep Boys’ shareholders will be held following the filing of a definitive proxy statement with the U.S. Securities and Exchange Commission (the “SECâ€) and subsequent mailing of the proxy statement to shareholders. The Gores Group has fully committed financing and the transaction is not subject to a financing condition.
The transaction is currently expected to close in the second fiscal quarter of 2012. Following completion of the transaction, Pep Boys will become a privately held company and its stock will no longer trade on the New York Stock Exchange. Pep Boys noted that, in light of the proposed transaction, it will not host a conference call to discuss financial results for the 2011 fiscal year, but intends to file its year-end results with the SEC. In addition in anticipation of the transaction, Pep Boys has suspended its quarterly dividend.
BofA Merrill Lynch is acting as the exclusive financial advisor to Pep Boys and has provided a fairness opinion to the Board of Directors of Pep Boys in connection with the transaction. Morgan, Lewis & Bockius LLP is acting as legal advisor to Pep Boys. Credit Suisse Securities (USA) LLC, Barclays Capital, and Sagent Advisors are acting as financial advisors to The Gores Group. Skadden, Arps, Slate, Meagher & Flom LLP is acting as legal advisor to The Gores Group.
About Pep Boys
Since 1921, Pep Boys has been the nation’s leading automotive aftermarket chain. With more than 7,000 service bays in more than 700 locations in 35 states and Puerto Rico, Pep Boys offers name-brand tires; automotive maintenance and repair; parts and expert advice for the Do-It-Yourselfer; commercial auto parts delivery; and fleet maintenance and repair. Customers can find the nearest location by calling 1-800-PEP-BOYS (1-800-737-2697) or by visiting www.pepboys.com.
About The Gores Group
The Gores Group, founded by Alec Gores in 1987, has since its inception successfully acquired and operated more than 80 companies across diverse industries with more than $15 billion in aggregate annual revenue. A leading investment firm, The Gores Group specializes in acquisitions where operational transformation and/or flexible capital can maximize the potential of a business. Headquartered in Los Angeles, The Gores Group maintains offices in Boulder, CO, and London. For more information, please visit www.gores.com. |
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