PHILADELPHIA - The Pep Boys – Manny, Moe & Jack, an automotive aftermarket service and retail chain, 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 January 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. The special meeting of Pep Boys’ shareholders, which was scheduled to be held on May 30, 2012, has been canceled.
"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 & Chief Executive Officer. "We will continue to earn the TRUST of our customers every day, grow through Service & 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.”
Mike continued, “Our financial position is solid. 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."
Pep Boys is scheduling a conference call to discuss its first quarter earnings on June 7 at 8:30 a.m. ET.