Pep Boys launches strategic business review
PHILADELPHIA (June 30, 2015) — Pep Boys – Manny, Moe & Jack's board of directors has initiated a review of strategic alternatives to enhance shareholder value, including a possible sale, merger or other form of business combination or strategic transaction.
Pep Boys, which describes itself as the “nation's leading automotive aftermarket service and retail chain,” said the strategic review is being undertaken at this time in light of inquiries the board has received from third parties “expressing an interest in a potential transaction.”
The board has determined, Pep Boys said, that “it is appropriate to conduct a strategic review that evaluates Pep Boys' current long-term business plan against a broad range of alternatives that have the potential to enhance shareholder value.”
The board has retained Rothschild Inc. as its financial adviser and Morgan, Lewis & Bockius L.L.P. as its legal adviser.
“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,” said Chairman Bob Hotz.
“We will continue to focus on these value-enhancing opportunities under the leadership of Scott Sider, our new CEO.
“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.”
The company said it has no set timetable for the strategic review process, nor has it decided at this time to pursue a transaction. It cautioned that “there can be no assurance that the process described above will result in the consummation of any transaction or, if a transaction is undertaken, as to its terms, structure or timing.”
Pep Boys does not intend to disclose or comment on further developments regarding its review of possible strategic alternatives unless and until the board approves a specific action or it otherwise concludes its review of strategic alternatives.
Three years ago, Pep Boys went through a private equity buyout, only to have the interested investor Gores Group L.L.C. call off its proposed acquisition of Pep Boys following two consecutive lackluster quarters.
Last September, Pep Boys' President and CEO Mike Odell resigned two weeks after Philadelphia-based Pep Boys reported a second quarter net loss and disclosed plans to close up to 63 Supercenters in a cost-cutting move.
More recently, Pep Boys avoided a proxy fight with its largest shareholder, GAMCO Asset Management Inc., by agreeing to nominate three directors recommended by GAMCO to be voted on at Pep Boys' annual meeting July 10.
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