99 Cents Only Stores to be acquired by Ares and CPPIB for $1.6 billion
12 Oct 2011
Discount retailer 99 Cents Only Stores Inc. yesterday agreed to be acquired by private equity firm Ares Management and the Canada Pension Plan Investment Board (CPPIB), for about $1.6 billion.
The California-based discount chain agreed to be taken private after it rejected in March a $1.34 billion offer from the Schiffer-Gold family and Leonard Green & Partners, a private equity firm specialising in leveraged buyouts.
Ares and the CPPIB are paying $22 a share in cash for the chain, representing a 32 per cent premium above the company's share price before the March bid.
At $1.6 billion, the deal is the 20th largest private equity buyout offer this year in the retail sector according to data compiled by Bloomberg.
After the Leonard Green bid, 99 Cents Only set up a special committee to pursue ''strategic alternatives''. Meanwhile, shares of the discount retailer have been trading above the $19.09 a share offer of Leonard Green, a sign that investors were expecting a higher rival bid.
The discount chain said the family of company founder David Gold had approved the Ares-CPPIB offer and would continue to hold a significant minority stake. Eric Schiffer, the CEO 99 Cents Only along with his brothers-in-law Jeff Gold, the company's president, and Howard Gold, executive vice president, would continue in their positions and serve as directors, while David Gold would serve as chairman emeritus.
