Pep Boys (PBY): After its proposed $800 million deal with private equity firm Gores Group fell through, the stock has fallen 40% from its takeover price, and is cheaper than when the buyout was even proposed.
This indicates that investors have totally forgotten about the long term viability and earnings power of the business, and are instead suffering from "dead-money syndrome," where nothing can seem to get people interested after such a large decline.
After a weak first quarter, CEO Mike Odell believes demand trends have improved significantly, and the third and fourth quarter should show a return to the consistent growth of the past.
Additionally, as a result of the failed merger, Gores Group will be paying PBY a $50 million fee. While a small portion of this will be cut into by merger fees, the rest will go toward paying down some long-term debt and the pension plan.
Jim Cramer says nothing about the 50 million they received last Friday. He is out of touch on this one.