The news does not bode well for Manny, Moe & Jack, as Pep Boys was left at the altar when its proposed $1 billion sale to Gores Group LLC fell asunder. 
Gores Group, a Los Angeles-based private-equity firm, cancelled its plans to buy Pep Boys after the retailer posted lower than expected first quarter results. Pep Boys also declined a Gores Group request to delay a May 30 shareholder vote on the acquisition in order to review Pep Boys’ financials for potential “material adverse effect” that could void the deal.
Shares of Pep Boys on the New York Stock Exchange fell more than 24% after news of deal’s cancellation was first revealed earlier this month.
“The mild winter weather, restrained customer spending, delays in implementing new technology and disruption during store conversions have impacted recent results,” Pep Boys CEO Mike Odell said in a statement. “Nevertheless, we remain on course with our transformation.”
Gores Group will pay Pep Boys some $50 million and will reimburse the retailer for some merger-related expenses as settlement “for any and all potential claims that Pep Boys could assert under the terms of the merger agreement,” Pep Boys said in a statement yesterday.
Odell stated that the company’s “financial position is solid,” and plans call for Pep Boys to use available cash and the Gores settlement to pay down loans and refinance senior subordinated notes in 2013, Odell said.
In January, Gores Group said it would acquire Pep Boys for $15 per share. The deal was set to close by mid-2012, but the equity firm expressed concerns after Pep Boys’ first quarter financials were released on May 1.
