Reuters: Global Markets: Pep Boys shares tumble after Gores calls off buyout

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Pep Boys shares tumble after Gores calls off buyout May 30th 2012, 12:28 Wed May 30, 2012 8:28am EDT (Reuters) - Shares of Pep Boys Manny, Moe & Jack (PBY.N) fell almost 25 percent after private equity firm Gores Group walked away from a $791 million deal to buy the auto parts retailer. Gores had offered $15 per share for Pep Boys in January, but earlier this month sought to delay the shareholder meeting scheduled to vote on the deal citing serious deterioration in Pep Boys' business. The company late on Tuesday cancelled the shareholder meeting scheduled for May 30, after agreeing to terminate the Gores deal, and said it would receive $50 million from the private equity firm. Pep Boys, which barely made a profit in the first quarter, said results were below expectations due to a variety of factors that occur in the ordinary course of business. Pep Boys, which also provides auto-repair services, has tried to sell itself many times in the past without any success. Its smaller rival Midas was recently bought by a unit of Sumitomo Corp (8053.T) for $173 million. Another competitor Monro Muffler (MNRO.O) last week said it would accelerate the pace of acquisitions amid weak demand. Sophis Investments LLC, an investment advisory firm, on Tuesday said it sent a letter to the Pep Boys board asking them not to adjourn the shareholder meeting. A voluntary adjournment gives credence and the appearance of validity to Gores' claims, Sophis' president Tassos Recashinas said in the letter. Pep Boys' shares fell to $8.36 in premarket trading on Wednesday, a level not seen since August 2011. They closed at $11.09 on Tuesday on the New York Stock Exchange. The stock has fallen almost 25 percent since Gores warned about cancelling the merger agreement on May 1. (Reporting by A. Ananthalakshmi in Bangalore; Editing by Sreejiraj Eluvangal) Link this Share this Digg this Email Reprints

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