Pep Boys No Longer Selling
The Philadelphia-based auto parts retailer cancelled a sale process; same goes for truck accessory company Lund International.
April 21, 2011
Auto parts retail chain Pep Boys - Manny Moe & Jack had been exploring a sale, but that may have changed over the past month.
“They’re looking at ways to raise shareholder value, but not a sale,” says a source in the automotive aftermarket.
Philadelphia-based Pep Boys isn’t the only auction in the space that has stalled.
Selling truck accessory company Lund International Inc. has also been difficult, according to two sources.
“It’s somewhat of a broken process,” one source added. “The transaction should have closed by now.”
The Buford, Ga.-based manufacturer of truck parts -- hood shields, running boards and storage boxes -- first launched a sale process in October, Mergers & Acquisitions learned.
Since then, “it hasn’t received the bids that it wanted.”
Calls to Pep Boys and Lund were not returned.
The fact that both auctions were cancelled underscores a larger trend. Deal pros may still find the auto aftermarket ripe for M&A, but that doesn’t mean there are targets available.
According to a March 2011 analyst report from Capstone Financial Group, the Hilton Head, S.C.-based advisory firm points out that, lately, “sellers have expressed little interest in divesting their businesses despite the fact that most businesses sold this year have been at a premium.”
Deals that closed include New Zealand-based private investment company Rank's purchase of spark plug manufacturer Honeywell’s Consumer Products Group in January and filtration systems manufacturer UCI International in November for $950 million and $971.1 million respectively.
New York-based PE firm Avista acquired the Armor All and STP car-care brands from Clorox Co. in October for $756 million.
Even though we're seeing "a return to 2007 levels in terms of pricing, availability and debt limits," the report explained, "[buyers] are being priced out of deals by the intense competition."
Last month, Mergers & Acquisitions reported that the auction for wind shield wiper manufacturer Trico Products Corp. was in its final stages. Kohlberg & Co. LLC hired Lazard to shop the Rochester Hills, Mich.-based company in October.
Also in March, Sarasota, Fla.-based TMR Holdings LLC agreed to a deal with PE shop Islington Capital Partners, while Platinum Equity acquired a minority stake in Exeter, Pa.-based Keystone Automotive Operations Inc.
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