("There's going to be more stores": See DiStefano's column in Tuesday's Inquirer for an interview with Pep Boys' prospective new owner.)
Pep Boys - Manny Moe & Jack, the Philadelphia-based auto parts and service chain, says it has agreed to be acquired by Alec Gores' Los Angeles-based Gores Group for $15 a share, pending shareholder approval, unless a richer offer comes in quick. News release here.
The price works out to around $790 million in cash, plus over $200 million in Pep Boys debt that Gores will take over, for a total "enterprise value" of around $1 billion.
Pep Boys boss Michael Odell, who's been talking to potential Pep Boys buyers since he took the top job four years ago, has sent letters to Philadelphia Mayor Michael Nutter and Pennsylvania Gov. Tom Corbett "letting them know we are not anticipating moving the headquarters," Odell told me after a 9 a.m. meeting with workers at the 92-year-old store chain's Allegheney Ave. headquarters. "We're proud to be a Philly-based company and we plan to remain a Philly-based company." He'll meet with managers of the company's 700 stores at their annual gathering in Phoenix tonight.
Pep Boys employs around 19,000 workers at its offices and 700-plus stores, including 85 purchased last year in a deal with the Big Ten chain, plus three smaller acquisitions, on Odell's watch. Odell and members of his management team have not yet signed contracts to work under Gores, "but they like (Pep Boys') team. They are here to make our vision a reality," Odell said. Gores owns other auto-parts-related businesses; none are currently Pep Boys suppliers and there are no plans to combine the operations.
Buyer Gores owns dozens of companies, including auto shipper United Road Services, of Michigan, and South Carolina-based Sage Automotive Interiors. Its non-auto holdings include Westwood One, the radio and TV programming company that produces Philadelphia-based talker Michael Smerconish's radio show, among many others. More on Gores and what it owns here.
Odell says he's looking forward to running Pep Boys as a private company: "One, we don't have to be as open with the world with our strategies. There's things you have to tell your shareholders, because you dont want to surprise them, but you don't want to tell your competitors."
Also, Gores brings "operational expertise" and "a more flexible capital structure" that will make it easier to raise money and finance acquisitions quickly. "They want us to grow," he added.
Gores will "take the brand and business to the next level" by "scaling its powerful differentiated service platform," Gores' consumer investments chief Lee Bird said in the statement. Gores will be "supporting (Pep Boys') continued growth and expansion" with its own cash, added Ryan Wald, M&A director at Gores.