Pep Boys Agrees to $791M Acquisition

Auto parts chain Pep Boys has agreed to go private in an $800 million deal in which the nationwide chain will be acquired by the Gores Group.

Per a press release, the deal is expected to wrap in the second quarter of 2012, and Pep Boys will no longer be traded on the New York Stock Exchange. Gores Group offered $15 a share for Pep Boys stock in the deal, 24% up over the company’s per share price at the close of trading on Friday. Nearly a year ago, the company halted efforts to go private due to a lack of high enough bids for the auto supply chain during the earlier efforts. At the start of the last go-round, Pep Boys reported earnings of $1.99 billion in the fiscal year ending January 2011, an increase of over 4% from the previous year.

In a press release, CEO Mike Odell confirmed leadership at Pep Boys would remain consistent, and said:

“Partnering with The Gores Group delivers a significant premium for Pep Boys’ shareholders and ensures a strong foundation for us to continue our expansion. 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.”

In the same release, Managing Director of Operations and Consumer Practice Leader at The Gores Group Lee Bird 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.”

In anticipation of the close of the transaction in Q2, Pep Boys has suspended its quarterly dividend.