PHILADELPHIA Pep Boys announced that it has agreed to terminate the proposed merger between Pep Boys and The Gores Group.
As settlement for any and all potential claims that Pep Boys could assert under the terms of the merger agreement, previously announced on Jan. 30, 2012, The Gores Group has agreed to pay Pep Boys a fee of $50 million and to reimburse Pep Boys for certain merger-related expenses.
“This announcement does not alter our vision to be the automotive solutions provider of choice for the value-oriented customer,” said Mike Odell, Pep Boys’ president and CEO. “We will continue to earn the trust of our customers every day, grow through service and tire centers and be the automotive superstore. The mild winter weather, restrained customer spending, delays in implementing new technology and disruption during store conversions have impacted recent results. Nevertheless, we remain on course with our transformation.”
“Our current intention is to use our cash on hand and the settlement proceeds to pay down our term loan this year and then to refinance our senior subordinated notes in 2013, both in advance of their respective 2013 and 2014 maturities,” he said.
The company also reported results for the 13 weeks (first quarter) ended April 28. Sales for the 13 weeks increased by $11.1 million, or 2.2 percent, to $524.6 million from $513.5 million for the 13 weeks ended April 30, 2011. Comparable sales decreased 2.8 percent, consisting of a 1.2 percent comparable service revenue decrease and a 3.2 percent comparable merchandise sales decrease.