Gores Group, a US-based private equity firm that specialises in acquiring controlling interests in mature and growing businesses, today agreed to buy Pep Boys, an auto parts chain, for about $791 million.

Founded more than 90 years ago and based in Philadelphia, Pep Boys sells automotive services, tires, parts and other auto accessories in more than 700 locations in 35 states of the US and Puerto Rico.

The company also serves the commercial auto parts delivery market and is one of the leading sellers of replacement tires in the US. It was named one of the 500 fastest-growing US companies in 2005.

Under the terms of the deal, Los Angeles-based Gores Group will pay $15 per share in cash, representing a premium of 24 per cent over Pep Boys' closing price of $12.08 on 27 January.

The total transaction, including debt, is valued at about $1 billion.

The board of Pep Boys have approved the merger and is expected that Mike Odell, Pep Boys' president and CEO and other members of the senior management team will continue in their roles with the company post transaction.

The agreement includes a provision, which allows Pep Boys to seek and receive alternative offers for a period of 45 days.

Lee Bird, managing director of operations at Gores Group, said, ''Pep Boys' strong brand awareness and management's strategy to be the automotive solutions provider of choice for the value-oriented customer positions Pep Boys for growth.''

Ryan Wald, managing director of mergers & acquisitions at Gores Group, said, ''For over 90 years, Pep Boys has been the leading automotive service and retail chain and we look forward to supporting the Company's continued growth and expansion with our substantial equity resources.''

Founded by Alec Gores in 1987, Gores Group has since inception acquired and operated more than 80 companies across diverse industries with more than $15 billion in aggregate annual revenue.