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99 Cents Only Stores Are Sold for $1.6 Billion

By Aaron Blevins, 10/13/2011

Co. Says Customers Should Not Expect Any Immediate Changes

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Affiliates of Ares Management LLC and the Canada Pension Plan Investment Board (CPPIB) have acquired 99 Cents Only Stores for $1.6 billion, though consumers should not expect to notice changes at the retailer in the near future. The companies announced the acquisition on Tuesday.

The 99 Cents Only Stores have several locations in the local area, including a store at 825 N. La Brea Ave. (above), and others at 601 S. Fairfax Ave., 6121 Wilshire Blvd., and 5270 Sunset Blvd. (photo by Edwin Folven)

“I am pleased to announce this agreement as it delivers significant value to our shareholders,” 99 Cents Only chief executive officer Eric Schiffer said in a statement. “We have come to know and respect Ares Management and CPPIB through this process, and we believe they will be excellent partners and help us achieve our long term goals as a company. We look forward to continuing to deliver extreme value to our customers and providing a great place to work for our 99ers.”

Bill Mendel, of Mendel Communications, which is handling media relations for the transaction, said the agreement will not necessarily result in any changes to locations in the area.

“The transaction is about expanding (the business’) footprint and continuing its successful growth and operations,” Mendel said.

The definitive agreement calls for the sale of the stores for $22 per share, which represents a premium of 32 percent to the store’s closing share price on March 10, the day before 99 Cents Only received the acquisition proposal. A special committee had evaluated the proposal, while entertaining other offers and strategic alternatives, before unanimously approving the Ares and CPPIB bid. The company’s board also approved the buy-out, and its shareholders are slated to follow suit.

Members of the Gold/Schiffer family, the previous owners, will still retain a significant majority stake in the company. Schiffer, president and chief operating officer Jeff Gold, and executive vice president Howard Gold will continue working in their positions while serving as directors. Founder David Gold will be the company’s chairman emeritus.

“We believe that 99 Cents Only Stores is a franchise company, and we look forward to working closely with the company’s management team and dedicated employees to continue to expand the business in order to successfully increase the company’s attractive current market position,” said David Kaplan, a senior partner and founding member of Ares Management, in a statement. “We are thrilled to be adding 99 Cents Only Stores to our long track record of utilizing our financial capital to facilitate organic growth in the companies in which we invest, such as Aspen Dental, Floor and Decor Outlets of America, General Nutrition Centers, Maidenform Brands, Samsonite and Serta & Simmons Bedding Company.”

The transaction requires the approval of the holders of a majority of the 99 Cents Only Stores’ outstanding shares, which will be sought at a special meeting. The acquisition is also subject to closing conditions, including the expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act. It is expected to close during the first quarter of 2012.

“We are pleased to be partnering with the Gold/Schiffer family and Ares in making this investment in 99 Cents Only Stores, which has a strong market position and attractive store economics in a growing retail sector,” aid Andre Bourbonnais, senior vice president, private investments for CPPIB. “This investment is consistent with our strategy of investing alongside strong partners in an asset that we believe is well positioned for the long term and has shown good performance in various economic environments.”

The 99 Cents Only Stores have 214 locations in California. The company also has stores in Texas, Arizona and Nevada. The first 99 Cents Only store opened in 1982, with the first local store opening on Fairfax and 6th in 1989. Gold, the founder, is a Carthay Circle resident.

 

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One Response to “99 Cents Only Stores Are Sold for $1.6 Billion”

  1. Heather says:

    I think you need to open up more stores in MA and FL…I moved to MA from AZ and noticed there are no stores like this….I’m dying for a 99 cent only store….I miss it!!!


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