Retail Service

Pep Boys to consider sale, merger options

Order Reprints

The board of directors for Pep Boys — Manny, Moe & Jack says it will consider a possible sale, merger or other business transaction while conducting a review of "strategic alternatives to enhance shareholder value."

The announcement comes less than a month after Pep Boys avoided a fight with its largest shareholder, GAMCO Asset Management Inc., which alleged the company's financial performance was below par and that "the board could be improved by the addition of directors who have strong, relevant backgrounds and who are committed to fully exploring all opportunities to unlock shareholder value.”

GAMCO and Pep Boys ultimately settled, and three GAMCO appointees are among the board members to be elected during the Pep Boys annual shareholders meeting July 10. Days after that settlement, Pep Boys made a separate announcement that it had hired a new CEO, Scott Sider.

The board will conduct its strategic review with the help of Rothschild Inc. as its financial advisor and Morgan, Lewis & Bockius LLP as its legal advisor. In a press release Pep Boys says the two firms already have been advising the board "in connection with the various inquiries that have been previously received from third parties expressing an interest in a potential transaction.

"The board has determined that, in light of these inquiries, 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."

Pep Boys says there is no set timetable for the review process, and the company has not made a decision to pursue a transaction.

"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."

Bob Hotz, chairman of the board, says, “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.

“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.”

To read more of Modern Tire Dealer's coverage of Pep Boys, see:

25 years later, it's takeover time again! Is Pep Boys next?

Related Articles

How to Leverage Inspections to Drive More Business

Dobbs Tire Partners With Garage Gurus for Training

You must login or register in order to post a comment.