Pep Boys Does Everything for Less (Except Go Private)

Auto parts chain

is going to be going private with the investment firm the Gores Group, at a cost of approximately $791 million. According to the

, the 90-year-old company has been offered $15 per share, a 24 percent premium on Friday's closing price of $12.08. Following the news, shares in PBY shot up to $3.08, or 25.5 percent, to $15.16 in Monday morning premarket trading. The Gores Group has found the acquisition of Pep Boys attractive due to PBY's recognizable brand and reputation for affordability. Based in Philadelphia, Pep Boys has 700 locations in 35 states plus Puerto Rico. The acquisition comes hot on the heels of last month's news that Pep Boys had reported third quarter income rising 23 percent on stronger tire sales and improving service sales. President and CEO Mike Odell said then that the success was due in part to improved marketing (everyone loves that jingle referenced in the title of this article), lower gas prices and pent-up demand. Rather cleverly, PBY included a provision in the deal which allows the company to seek better, alternative offers for a period of 45 days. So if anyone out there has about $800 million lying around, treat yourself to a car parts business. It might take more than that though; with approximately 53 million shares outstanding, both companies put the total enterprise value of the deal at about $1 billion. We are not sure how many wiper blades Gores will have to have sold before making all of its money back, but it is a lot. The Gore Group has said that the financing required for the sale is fully committed, and so the deal will not be subject to any financing conditions. In addition, Odell and other executives are expected to retain their jobs. The Pep Boys board voted unanimously in favor of the buyout, although it still needs approval from the shareholder. At that price, it's hard to see anyone with a financial stake having any issues.