Nick Ut/Associated PressA shopper at a 99 Cents Only outlet in Los Angeles.
The low-cost retailer 99 Cents Only Stores agreed on Tuesday to sell itself to a group of investors that includes its founding family for $1.6 billion in cash, ending a months-long sales process.
Under the terms of the deal, Ares Management and the Canadian Pension Plan Investment Board will pay $22 a share, 7.3 percent above Monday’s closing price.
It is also nearly 32 percent above the company’s stock price on March 10, the last day before 99 Cents received its first takeover offer, from Leonard Green Partners.
The Gold/Schiffer family, which founded the company almost 30 years ago, has agreed to roll over its 33 percent stake into the newly private company. The existing management, led by members of the family, will continue to run the company.
The winning bid by Ares and the Canadian pension plan emerged after the 99 Cents board formed a special committee to consider takeover offers after the company received Leonard Green’s $19.09-a-share bid in March.
“We have come to know and respect Ares Management and C.P.P.I.B. through this process, and we believe they will be excellent partners and help us achieve our long-term goals as a company,” Eric Schiffer, the chief executive of 99 Cents, said in a statement.
So far this year, low-cost retailers have been a popular target for private equity firms. Such stores are expected to continue growing amid deepening economic malaise.
Two weeks ago, Family Dollar warded off a $7 billion takeover bid by Nelson Peltz that it said undervalued the company. In exchange for dropping his bid, Mr. Peltz received a seat on Family Dollar’s board.
Based in Commerce, Calif., 99 Cents runs 287 stores in the Southeast and Texas. It reported $74.3 million in profit on revenue of $1.4 billion for its most recent fiscal year, which ended in April.
The 99 Cents special board committee was advised by Lazard and the law firm Morrison Foerster, while the company was counseled by Munger, Tolles Olson. The Gold/Schiffer family was advised by Guggenheim Securities and the law firm Skadden, Arps, Slate, Meagher Flom.
Ares and the Canadian pension plan received advice and financing from RBC Capital Markets and BMO Capital Markets. Ares was counseled by Proskauer Rose, while the Canadian pension plan received legal advice from the law firm Torys.
Article source: http://feeds.nytimes.com/click.phdo?i=59907e5f36caaecc3656934679f869a6
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