Pep Boys - Manny, Moe & Jack announced Tuesday morning that its board of directors is considering merging or selling the company.
The board will be assisted in its review by Rothschild Inc. as its financial adviser and Morgan, Lewis & Bockius LLP as its legal advisor, the company announced.
Mario Gabelli's Gamco Investors, which has 19 percent equity in Pep Boys, was not surprised by the announcement.
"After they fired [former CEO] Michael Odell, I thought, 'Here we go again.' They do not have the right business model. We liked Odell. We thought he was doing a great job," Gabelli said.
Odell left in September.
The company recently agreed to nominate three board members recommended by Gabelli to avoid a proxy fight.
Gabelli said he has not spoken to any executive from Pep Boys since the announcement. But he said the tire company "Sumitomo, which owns Midas, and some other companies that sell tires, might buy Pep Boys."
Three years ago, a proposed takeover of the struggling automobile service and tire company fell through.
Pep Boys faces strong competition from Advance Auto Parts and O'Reilly Auto Parts.
The Philadelphia company has more than 800 locations in 35 states and Puerto Rico.
Following Pep Boys' announcement, company stock hit its 52-week high of $12.62 before closing at $12.27.
Profits have been falling for several years at Pep Boys. Here's a rundown:
Net (loss) earnings (millions)
Fiscal 2014. . . (27.3)
Fiscal 2013. . . 6.8
Fiscal 2012. . . 12.8
Fiscal 2011. . . 28.9
Fiscal 2010. . . 36.6
Net earnings for the first quarter of fiscal 2015 were $11.9 million ($0.22 a share) compared with earnings of $1.6 million ($0.03 a share) in the first quarter of fiscal 2014.