Tallahassee, FL 5/1/12 (StreetBeat) -- Pep Boys (NYSE: PBY) -- Manny, Moe & Jack, the Philadelphia-based automotive retailer that agreed to be acquired by Gores Group, said its would-be buyer is concerned about “serious deterioration” in the business.On April 26, Gores asked for a delay of a special shareholders’ meeting by 30 days to allow it to determine the causes and extend of the “significant downturn,” Pep Boys said in a filing today. The shares slumped as much as 24 percent.
Pep Boys, founded in 1921, agreed to be bought in January for $15 a share. First-quarter sales were $513.5 million, compared with a prediction of as much as $526 million, the company said today. Pep Boys said its results missed expectations because of what it called factors occurring in “the ordinary course of business.”
If the downturn was due to a “material adverse effect” or a “material breach of covenant” has occurred, Gores may decide not to consummate the deal, according to the filing.
The shares fell 22 percent to $11.64 at 9:25 a.m. before the markets opened.
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