Pep Boys – Manny, Moe & Jack, the Philadelphia-based, 729-store auto-parts and car-repair chain, said it had agreed to be bought by Los Angeles-based Gores Group for $15 a share, if share- holders approve. “We’ll be making further investments in the business, and there’s going to be more stores,” Ryan Wald, mergers-and-acquisitions director at $4 billion-in-assets Gores, told me.
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. LINK
Pep Boys has been a Philadelphia based company for almost a hundred years. This week they were sold to a L.A. based investment group. *GASP* This story hit home for my family because the Oberfrau has worked for Pep Boys for about eighteen years now. You can imagine our initial shock at hearing the news. Immediately our thoughts turned to the future and what this sale means for her employment. Typically when these acquisitions happen her position is one that may get farmed out as a new team comes on board. So far though it appears that her job and the thousands of others in the area will remain secure. That’s a good thing.
But it also forces us to confront the larger issue here, one that has presidential politics written all over it. Mitt Romney has been beaten up in the MSM for working for a company that orchestrated these type of deals. “Corporate Raider” is the usual derogatory term that is applied. In my opinion I don’t believe that’s true. In the business world companies are either healthy, stable or sick. (in government it’s usually sick) Companies exist to make money. When they don’t they are sick. Sometimes sick patients die. Sometimes horses have to be put down. Businesses that don’t stay healthy and fight off infection, or lose their way can become terminally ill.
Pep Boys has been mostly stable for many years now. Hopefully the investment group can return the company to the healthy stage and the company (as well as the local economy and the employees) will benefit. Like the lions and tigers of the world who pick off the old and sick of the herds, “corporate Raiders” pare sick businesses from the economy so that new ones can emerge. It’s only government (like the Obama administration) and unions that think you can stay in business by LOSING MONEY, especially tax payer money. Thanks to this investment group Pep Boys gets a new lease on life and the chance to prosper going forward.
So for now the Oberfrau’s dream of sitting on the couch, eating Bon Bons and collecting unemployment for years on end has been dashed. Back to the salt mine girl!