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.”
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.”
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.”
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 “SEC”) 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.
Forward-Looking Statements
This press release contains forward-looking statements, which
may be identified by words such as “believes,” “expects,”
“anticipates,” “estimates,” “projects,” “intends,” “should,”
“seeks,” “future,” “continue,” or the negative of such terms, or
other comparable terminology. Forward-looking statements are
subject to risks, uncertainties, assumptions and other factors that
are difficult to predict and that could cause actual results to
vary materially from those expressed in or indicated by them.
Factors that could cause actual results to differ materially
include, but are not limited to: (1) the occurrence of any event,
change or other circumstances that could give rise to the
termination of the merger agreement; (2) the outcome of any legal
proceedings that may be instituted against Pep Boys and others
following announcement of the merger agreement; (3) the inability
to complete the merger due to the failure to satisfy the conditions
to the merger, including obtaining the affirmative vote of at least
a majority of the votes cast by the holders of Pep Boys’
outstanding shares of common stock entitled to vote on the adoption
of the merger agreement; (4) risks that the proposed transaction
disrupts current plans and operations and potential difficulties in
employee and customer retention as a result of the merger; (5) the
ability to recognize the benefits of the merger; (6) legislative,
regulatory and economic developments; and (7) other factors
described in Pep Boys’ filings with the SEC. Many of the factors
that will determine the outcome of the subject matter of this press
release are beyond Pep Boys’ ability to control or predict. Pep
Boys can give no assurance that the conditions to the merger will
be satisfied. Except as required by law, Pep Boys undertakes no
obligation to revise or update any forward-looking statement, or to
make any other forward-looking statements, whether as a result of
new information, future events or otherwise. Pep Boys is not
responsible for updating the information contained in this press
release beyond the published date, or for changes made to this
press release by wire services or Internet service providers.
Additional Information and Where to Find It
This press release may be deemed to be solicitation material in
respect of the proposed acquisition of Pep Boys by The Gores Group.
Pep Boys plans to file a proxy statement with the SEC. INVESTORS
AND SECURITY HOLDERS OF PEP BOYS ARE ADVISED TO READ THE PROXY
STATEMENT AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC WHEN
THEY BECOME AVAILABLE BECAUSE THOSE DOCUMENTS WILL CONTAIN
IMPORTANT INFORMATION ABOUT THE PROPOSED ACQUISITION. The
definitive proxy statement will be mailed to shareholders of Pep
Boys. Investors and security holders may obtain a free copy of the
proxy statement when it becomes available, and other documents
filed by Pep Boys with the SEC, at the SEC’s web site at
http://www.sec.gov. Free copies of the
proxy statement, when it becomes available, and Pep Boys’ other
filings with the SEC may also be obtained from Pep Boys by
directing a request to Pep Boys, Attention: Investor Relations,
Mike Melia, or by calling (215) 430-9459.
Pep Boys and its directors, executive officers and other members
of its management and employees may be deemed to be soliciting
proxies from Pep Boys’ shareholders in favor of the proposed
acquisition. Information regarding Pep Boys’ directors and
executive officers is available in its Annual Report on Form 10-K
for the fiscal year ended January 29, 2011 filed with the SEC on
April 11, 2011, and definitive proxy statement relating to its 2011
Annual Meeting of Shareholders filed with the SEC on April 29,
2011. Shareholders may obtain additional information regarding the
interests of Pep Boys and its directors and executive officers in
the proposed acquisition, which may be different than those of Pep
Boys’ shareholders generally, by reading the proxy statement and
other relevant documents filed with the SEC when they become
available.
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