Pep Boys employs about 19,000 at its Allegheny Avenue headquarters, four distribution centers, and stores. Chief executive Michael Odell and members of his management team have not yet signed contracts to work under Gores, "but they like our team. They are here to make our vision a reality," Odell told me.
"We're doing this deal because we believe in what this management has accomplished to date and where they're headed," Wald told me. "We run our businesses with a long-term view, as if we're going to own them forever," so long as they yield capital returns to the firm's investors, including founder Alec Gores, pension funds, and others. Pep Boys boss Odell has reversed the company's previous trend toward larger East and West Coast suburban stores and added smaller stores in the middle United States.
Odell, who has been talking to potential buyers since he took the top job in 2008, sent letters to Mayor Nutter and Gov. Corbett "letting them know we are not anticipating moving the headquarters," he told me after a 9 a.m. meeting with workers at the 92-year-old retail chain's headquarters.
"We're proud to be a Philly-based company, and we plan to remain a Philly- based company," he added. Odell also planned to meet Monday night with store managers at their annual gathering in Phoenix.
The Gores offer works out to about $790 million in cash, plus more than $200 million in Pep Boys debt, for a total "enterprise value" about $1 billion.
The price "is a 35 percent discount" to rivals like AutoZone and Advance, noted analyst David A. Schick at Stifel, Nicolas & Co. He estimated the value of Pep Boys' real estate alone at $760 million.
