May 30, 2012 / 12:11 AM / 5 years ago

Pep Boys sale to PE firm canceled

(Reuters) - Automotive parts and service chain Pep Boys-Manny, Moe & Jack PBY.N said the sale of the company to private equity firm Gores Group has been called off.

Shares of Pep Boys fell about 10 percent to $10.01 in trading after the bell on Tuesday on the New York Stock Exchange.

Pep Boys will get $50 million in termination fees and will also be reimbursed for some merger-related expenses.

“Our current intention is to use our cash on hand and the settlement proceeds to pay down our term loan this year and then to refinance our senior subordinated notes in 2013...,” Pep Boys Chief Executive Mike Odell said in a statement.

The company had agreed to be bought by Gores Group for about $791 million in cash in January, after years of trying to sell itself.

However, earlier in May, Gores Group sought to delay the buyout after Pep Boys reported it had barely made a profit in the latest quarter.

Reporting by Abhiram Nandakumar in Bangalore

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