Palm Beach, FL 5/30/12 (StreetBeat) -- Pep Boys Manny, Moe & Jack (NYSE: PBY) shares crashed this morning after investors learned that private-equity shop Gores Groups will walk away from the $791 million deal to buy the auto-parts retailer. Gores cited serious problems with Pep Boys’ business.Shares of Pep Boys tumbled 22.5% to $8.59 in pre-market trading. Pep Boy shares have been under pressure for much of May, as Gores sought to delay the shareholder meeting to vote on the deal. After Gores initially agreed to the deal, Pep Boys stock stayed near the $15 offer price.
Pep Boys has sought a buyer for several years now, as its business deteriorated. Its profits were virtually flat in the first quarter, after a $8 million loss a quarter earlier. Its stock has dropped 43% in the past five years.
Meanwhile, other auto-parts retailers have raced ahead, taking advantage of Americans’ need to keep used cars running longer. AutoZone stock has risen more than 200% since 2007, while profit went from $509 million to $849 million. Advance Auto Parts shares increased 83%, and its net income grew from $238 million to $395 million. O’Reilly Automotive grew 165.1% on profits rising from $194 million to $508 million.
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