A new article from CoStar reports that 99 Cents Only Stores agreed to be acquired by affiliates of Ares Management LLC and Canada Pension Plan Investment Board for $20/share of common stock for a total value of $1.6 billion. The chain, founded in 1982, has 289 stores in the United States, most of which are located in California where 99 Cents Only is headquartered. As part of the deal, CEO Eric Schiffer, Chief Operating Officer Jeff Gold and Executive Vice President Howard Gold would stay in their current leadership roles and will serve as directors while founder David Gold would be chairman emeritus.
"We expect this transition to be a win-win for everyone as it delivers significant value to our shareholders," Schiffer told employees when announcing the deal. "It provides access to expertise to help us accelerate our growth, and helps ensure that we can continue to deliver extreme value to our customers and provide a great place to work for our 99ers. The news of this agreement should not be a distraction to any of us, as we do not contemplate any material change in the way the business is managed. It is business as usual."
99 Cents Only Stores is required to pay a termination fee of $47.25 million if it terminates the merger agreement under certain circumstances. Ares and the Canada Pension Plan would have to pay a $94.5 million termination fee. Since the announcement of the agreement, Weiss & Lurie, a national class action and shareholder rights law firm, has filed a class action on behalf of the shareholders of 99 Cents Only Stores in connection with the proposed acquisition alleging that it provides unfair and inadequate consideration to public NDN shareholders.
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