The board of directors for Pep Boys has started a “review of strategic alternatives to enhance shareholder value, including a possible sale, merger or other form of business combination or strategic transaction.”
Rothschild Inc. and Morgan Lewis & Bockius LLP will be assisting the board with its review. The financial advisor and legal council have already been working with the board in connection to inquiries from third parties expressing an interest in a potential transaction, according to a press release.
In light of these inquiries the board wants to explore Pep Boys’ long-term business plan against a range of alternatives.
“The board is encouraged by the value-enhancing initiatives that our management team has been pursuing and the progress that we have made in growing comparable store sales, driving gross margin returns, reducing expenses, shrinking inventory and unlocking the value of our real estate by rationalizing our store base. We will continue to focus on these value-enhancing opportunities under the leadership of Scott Sider, our new CEO,” said Bob Hotz, chairman of the board. “However, in keeping with our commitment to act in the best interests of all shareholders, and given that a number of potential strategic and financial buyers have expressed an interest in discussing a transaction with Pep Boys, we have determined that it is prudent to explore strategic alternatives to determine the best opportunities for enhancing shareholder value at this time.”
Pep Boys has not made a definitive decision to pursue a transaction and has set no timetable for the strategic review process.
In early June, three new directors were nominated to join Pep Boys board. The nominees—Matthew Goldfarb; F. Jack Liebau, Jr.; and Bruce M. Lisman—were all nominated by Gamco Asset, the company’s largest shareholder.
If the trio is approved by shareholders at its annual meeting on July 10, the men will join other incumbent directors Robert H. Hotz, James A. Mitarotonda, Robert L. Nardelli, Robert Rosenblatt, Jane Scaccetti, John T. Sweetwood and Andrea M. Weiss.
