PHILADELPHIA-Pep Boys has signed an agreement to be acquired by The Gores Group for $1 billion, or $15 per share in cash, taking the aftermarket auto parts chain private.
The Gores Group is a Los Angeles-based investment company. The current management, including Mike Odell, Pep Boys’ President & CEO, are expected to remain with the company after the transaction closes, expected in the second quarter of this year.
“Partnering with The Gores Group delivers a significant premium for Pep Boys’ shareholders and ensures a strong foundation for us to continue our expansion,” Odell says, in a prepared statement. “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.”
The price is a 24% premium over the company’s Jan. 27 closing price of $12.08. Pep Boys’ board has approved the transaction, but it is still subject to shareholder approval. The deal provides for a 45-day "go-shop" period, which can allow another company to bid.
“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,” said Alec Gores, founder and CEO of The Gores Group, in a statement.
Founded in 1921 by four Navy buddies (two named Moe) as Pep Auto Supplies, the company has more than 700 locations in 35 states and Puerto Rico. Since its founding in 1987, The Gores Group has acquired and operated more than 80 companies in various industries.
BofA Merrill Lynch is acting as the exclusive financial advisor to Pep Boys. 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.
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