June 7 Auto repair chain Pep Boys Manny, Moe &
Jack said demand trends have improved since the end of
May when a private equity firm terminated a deal to buy the
company citing weak results.
Pep Boys also said it was not considering other strategic
Comparable store sales have increased 3 percent since the
deal termination on May 29, Chief Executive Mike Odell said on a
conference call with analysts and investors on Thursday.
They fell 2.6 percent from the time the deal was announced
on Jan. 30 to the termination date, he said.
Pep Boys announced lower-than-expected first-quarter results
on Wednesday. A mild winter, which caused less wear and tear on
vehicles, and deferred purchases by customers due to a weak
economy are hurting the auto repair industry.
"We expect to return to consistent sales and profit
increases during the third and fourth quarters," CEO Odell said.
Los Angeles-based Gores Group walked away from a $791
million deal to buy Pep Boys citing serious deterioration in the
company's business and a breach of covenant under the merger
"Our intent is to grow, not to sell the company," Odell said
on the call, adding that the merger agreement with Gores was
signed after the private equity firm approached it, not the
other way around.
Reuters had reported after the Gores fallout that Pep Boys
intended to operate as a standalone public company and was not
actively looking to sell.
Pep Boys will receive the $50 million breakup fee from Gores
on Friday, Odell said.
Pep Boys shares, which have fallen about 40 percent since
Gores warned about cancelling the deal, were flat at $8.76 in
morning trading on the New York Stock Exchange.