Gores Gets Finance Commitment to Buy Pep Boys
The automotive aftermarket service agreed to be acquired by Gores Group for roughly $1B
January 30, 2012
Automotive aftermarket service The Pep Boys – Manny, Moe & Jack has agreed to be acquired by private equity firm The Gores Group for roughly $1 billion.
Pep Boys, which is based in Philadelphia and rated B by Standard & Poor’s, said today that Gores has fully committed financing and the transaction is not subject to a financing condition.
Pep Boys had been exploring a sale early last year, but the auction stalled as other options were being explored, Mergers & Acquisitions reported at the time.
“Gores was not part of that prior process,” a source close to the situation said in an interview. Buy-side advisers were hired in November, after exclusive talks between Gores and Pep Boys already began, he added.
Under the terms of the merger agreement, the Los Angeles-based sponsor will acquire all the outstanding common shares of Pep Boys for $15.00 per share in cash.
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, and other members of the senior management team will continue in their roles with the company after the completion of the transaction.
Gores is “effectively carrying forward management’s plan of expansion and direction that emphasizes service, more so than parts,” the source added.
Last May, Sun Capital Partners Inc. sold Big 10 Tires Inc. to Pep Boys for undisclosed terms.
Bank of America Merrill Lynch is acting as the exclusive financial advisor to Pep Boys and has provided a fairness opinion to its board. 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 adviser to Gores.
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