Pep Boys Becomes Dead Boys

Pep Boys – Manny, Moe & Jack (NYSE: PBY) was supposed to be the next buyout.  Apparently not and shares are getting crushed.  The news is out confirming that Gores is ditching its planned $15.00 per share buyout which would have valued that auto parts retailer at roughly $791 million.

A walk-away here almost feels like it is par for the course at Pep Boys.  This company has been an on-again off-again merger candidate for years.  The gains seen at the larger AutoZone Inc. (NYSE: AZO), Advance Auto Parts Inc. (NYSE: AAP) and O’Reilly Automotive Inc. (NASDAQ: ORLY) have not been shared by Pep Boys.  While sales grew in the sector as Americans let their cars get older and older it is hard to not notice that Pep Boys managed only meager growth with sales of $2.06 billion in the last fiscal year.

The vote was delayed earlier this month due to a serious deterioration in the Pep Boys’ business.  This had already put a hex on Peb Boys’ stock, sending shares from almost $15 down to as low as $11.09 recently.  This is one of those situations where bad news has turned into even worse news.

Shares are trading down 22.8% at $8.56 in active trading with over 1 million shares having traded in the pre-market and right after the open.  Keep in mind that the 52-week trading range is $8.18 to $15.46.

JON C. OGG