The Pep Boys – Manny, Moe & Jack, an automotive aftermarket service and retail chain, announced that it has entered into a definitive merger agreement under which it will be acquired by investment firm The Gores Group, led by founder and CEO, Alec Gores. Total enterprise value of the transaction is approximately $1 billion.

The company noted in an SEC filing that it received commitments from Barclays, Credit Suisse Group and Wells Fargo for $875 million in loans to support its acquisition.

Under the terms of the merger agreement, The Gores Group will acquire all the outstanding common shares of Pep Boys for $15.00 per share in cash. This represents a premium of 24% percent over Pep Boys’ closing price of $12.08 on January 27, 2012 and a premium of 36% over Pep Boys’ volume weighted average closing price over the last 30 trading days.

Pep Boys’ Board of Directors has unanimously approved the merger agreement and recommended that Pep Boys’ shareholders approve the transaction. It 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 after the completion of the transaction.

“Partnering with The Gores Group delivers a significant premium for Pep Boys’ shareholders and ensures a strong foundation for us to continue our expansion,” said Odell. “Our Board firmly believes that this transaction is in the best interests of all of our stakeholders and delivers an ongoing commitment to excellence for our customers and employees.”

Lee Bird, managing director of Operations and Consumer Practice Leader at The 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. We are excited to help Pep Boys build on this vision and enable the Company to take the brand and business to the next level by effectively scaling its powerful differentiated service platform.”

Ryan Wald, managing director of Mergers & Acquisitions at The 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.”

The Gores Group has fully committed financing and the transaction is not subject to a financing condition. The transaction is currently expected to close in the second fiscal quarter of 2012. Following completion of the transaction, Pep Boys will become a privately held company and its stock will no longer trade on the New York Stock Exchange.

BofA Merrill Lynch is acting as the exclusive financial advisor to Pep Boys and has provided a fairness opinion to the Board of Directors of Pep Boys in connection with the transaction. Morgan, Lewis & Bockius is acting as legal advisor to Pep Boys. Credit Suisse Securities (USA), Barclays Capital and Sagent Advisors are acting as financial advisors to The Gores Group. Skadden, Arps, Slate, Meagher & Flom is acting as legal advisor to The Gores Group.