Pep Boys nixes merger with private equity group
PHILADELPHIA — Pep Boys has put an end to the proposed merger between itself and investment firm The Gores Group.
The potential merger was first announced on Jan. 30, and The Gores Group has agreed to pay Pep Boys a fee of $50 million and to reimburse Pep Boys for certain merger-related expenses. The special meeting of Pep Boys’ shareholders, which was scheduled to be held on May 30, has been canceled.
"This announcement does not alter our vision to be the automotive solutions provider of choice for the value oriented customer,” said Mike Odell, Pep Boys’ president and CEO. "We will continue to earn the trust of our customers every day, grow through Service & Tire Centers and be the Automotive Superstore. The mild winter weather, restrained customer spending, delays in implementing new technology and disruption during store conversions have impacted recent results. Nevertheless, we remain on course with our transformation.”
Mike continued, “Our financial position is solid. Our current intention is to use our cash on hand and the settlement proceeds to pay down our term loan this year and then to refinance our senior subordinated notes in 2013, both in advance of their respective 2013 and 2014 maturities."
The Gores Group, founded in 1987, is a private equity firm that seeks to buy controlling interests in mature and growing businesses. Since its inception, Gores has acquired 80 companies worldwide with combined revenues in excess of $15 billion.