Shares of 99-Cents Only Stores rose more than 8% Monday on news that Apollo Global Management was preparing to bid for the discount chain, Reuters reported. The news of a possible buyout was first reported by the New York Post. California-based 99-Cents Only Stores is currently valued at about $1.17 billion.
(Reuters) – Shares of discount chain 99-Cents Only Stores rose more than 8 percent on Monday, following a media report that claimed private equity firm Apollo Global Management LLC was preparing to bid for the chain.
The New York Post said it learned from sources that the Schiffer-Gold family, which owns about a third of the company, has recently hinted that it is willing to team up with the highest bidder, after being wooed by Apollo.
In March, the Schiffer-Golds teamed up with private equity firm Leonard Green to offer $1.34 billion to take the chain private. The company is currently valued at about $1.17 billion.
“Instead of saying Leonard Green is not paying enough, (99 Cents) is saying (Leonard Green) needs to have its bid ready by mid-September,” one source told the Post.
City of Commerce, California-based 99-Cents Only Stores did not reply to an email seeking comment.
The company, which offers low-priced items such as stationery, party supplies, food and eyewear, could see other buyout offers as well, The New York Post’s sources said.
Retailers like 99-Cents Only that sell low-priced and close-out goods have little chance of running short of customers in a weak economy.
And cheap valuations and extensive real estate assets have made discount and dollar stores attractive targets, especially to private equity firms.
In June, BJ’s Wholesale Club Inc agreed to be bought by private equity firms Leonard Green & Partners and CVC Capital Partners for $2.8 billion in cash.
In April, 99-Cents Only formed a special committee of independent directors to consider the buyout offer from the Schiffer-Golds and Leonard Green, which to many indicated that there could be rival bids.
The retailer’s shares were up $1.43 at $18.01 in Monday morning trade.
(Reporting by Nivedita Bhattacharjee in Bangalore; Editing by Viraj Nair, Saumyadeb Chakrabarty)