99 Cents Only stock jumps on expectations of new buyout offer
Shares of 99 Cents Only Stores Inc. surged Monday after a report that the City of Commerce discount chain would receive a new buyout offer.
The company’s stock rose $1.42, or 8.6%, to $18.
Private equity firm Apollo Global Management has been courting 99 Cents Only and plans to make an offer for the chain, according to a news report.
The bid would rival a $1.3-billion buyout proposal that 99 Cents Only received in March from the company’s founding family and a Los Angeles investment firm.
Investors viewed the March bid as too low and quickly pushed the stock price beyond the $19.09 a share offered by the Schiffer/Gold family and Leonard Green & Partners to take the chain private. At the time, several industry analysts said they had expected a higher offer to emerge for the company, which sells discounted household items at 286 stores in four states.
The Schiffer/Gold family currently controls one-third of the retailer’s shares, and it is prepared to support the highest bidder, the New York Post said in a story Sunday, citing unnamed sources.
Dollar stores have been attractive takeover targets lately as the chains have taken market share away from major big-box discounters such as Wal-Mart Stores Inc. and Target Corp., especially in urban areas.
In its most recent quarter, 99 Cents Only reported that sales at stores open at least a year rose 5.9%. Profit totaled $17.7 million, or 25 cents a share, compared with $16.8 million, or 24 cents, a year earlier.
99 Cents Only Chief Executive Eric Schiffer did not return calls seeking comment Monday. An Apollo spokeswoman declined to comment.
