LOS ANGELES-The stock price for 99 Cents Only Stores rose to $21.41 today, its highest price in seven years, as the company announced it has entered into an acquisition agreement by a venture of locally-based Ares Management LLC and Canada Pension Plan Investment Board for $22 per share. The transaction, which allows former controlling entity Schiffer/Gold to retain a minority stake, has a total equity value of about $1.6 billion.
Leonard Green & Partners, also based here, had offered $19.09 per share to take over the company. The retailer’s Board of Directors formed a special committee to evaluate offers, and that committee unanimously referred this transaction to the board. The transaction still requires an affirmative vote by shareholders.
Founded in 1982 by David Gold, the City of Commerce, CA-based company has 289 stores, with the majority of these in California but also some stores in Texas, Arizona and Nevada. Over half of the company’s sales come from food and beverages, and most items are less than 99 cents.
CEO Eric Schiffer, President and COO Jeff Gold and EVP b will continue to serve in leadership roles in the new company. Founder David Gold will serve as chairman emeritus.
David Kaplan, a senior partner at Ares, said in a statement that his firm will continue to expand the stores “in order to successfully increase the company’s attractive current market position.” The firm has investments in firms such as Aspen Dental, General Nutrition Centers, Samsonite and Serta & Simmons Bedding Co.
Andre Bourbonnais, SVP of private investments for the Toronto-based pension fund, said in the statement that the board believes the stores have a strong market position and attractive store economics in a growing retail sector. "This investment is consistent with our strategy of investing alongside strong partners in an asset that we believe is well positioned for the long term and has shown good performance in various economic environments."
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