Los Angeles investment firm Gores Group takes a closer look at its planned… (Business Wire )
Pep Boys’ shares plunged nearly 25% in midday trading on Wall Street after reports that Los Angeles private equity firm Gores Group wants to delay a shareholders meeting in its $800-million buyout of the automotive retail chain.
Gores Group said it believes Pep Boy’s proxy statement, after a disappointing first quarter, “is no longer accurate,” according to a filing Tuesday with the U.S. Securities and Exchange Commission.
Gores wants to include in the company’s proxy a statement noting a “serious deterioration in the Pep Boys business,” the filing stated.
Pep Boys said quarterly results missed expectations, with earnings of $2 million expected on sales of as much as $526 million. It reported a loss for its fiscal fourth quarter, which ended Jan. 28, although it earned $28.9 million, or 54 cents a share, for the year, down from $36.6 million, or 70 cents, from the previous year.
Gores asked for a 30-day delay in mailing the proxy statement to give Gores time to probe the cause and extent of the quarterly downturn, according to the statement.
For its part, Pep Boys said it “believes that its first-quarter results were below expectations due to a variety of factors occurring in the ordinary course of business.”
Pep Boys said it made its earnings forecasts “in good faith” and said it believed no “material breach” of the merger agreement occurred.
Gores agreed in January to aquire the Philadelphia auto parts chain for $15 a share.
Shares of Pep Boys - Manny Moe & Jack had lost $3.62, or 24.3%, and were trading at $11.31 a share.
California has 130 Pep Boys shops, more than any other state. The company operates 738 stores nationwide, according to its annual SEC filings.
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