Photo: A-One Transmission/Flickr
NEW YORK (AP) — The Pep Boys — Manny, Moe & Jack has called off its planned $791 million acquisition by investment firm The Gores Group.The company’s shares tumbled $2.29, or 20.6 per cent, to $8.80 in premarket trading Wednesday.
The auto parts chain said late Tuesday that it will receive a $50 million settlement from Gores and will be reimbursed for certain acquisition-related expenses.
Pep Boys cancelled its special shareholders meeting, which had been scheduled for Thursday.
Pep Boys, which was founded more than 90 years ago, had agreed to the Gores deal of $15 per share in January. At the time, the companies put the total enterprise value of the transaction at approximately $1 billion.
Pep Boys began in 1921 with the Navy buddies and original Pep Boys: Emanuel “Manny” Rosenfeld, Maurice “Moe” Strauss, Moe Radavitz and Graham “Jack” Jackson. Their first store opened in Philadelphia under the name Pep Auto Supplies, according to the company’s website. Its name was changed around 1923 after Strauss noticed during a trip to California that many successful businesses there used first names.
Radavitz and Jackson both left the company early on. When Pep Boys went public in 1946, Rosenfeld served as its first corporate president. He held the post until his death in 1959. Strauss served as president from 1960 to 1973 and remained a board member until he died in 1982.
Pep Boys has faced increased competition over the years from companies including AutoZone Inc., Advance Auto Parts Inc. and O’Reilly Automotive Inc.
But President and CEO Mike Odell said in a statement that the Philadelphia company’s financial position is solid and that it will use available cash and the settlement proceeds to pay down a term loan this year and will refinance senior subordinated notes next year.
Pep Boys has more than 700 locations in 35 states and Puerto Rico.