Bloomberg News

99 Cents Agrees to $1.6 Billion Ares, Canada Pension Buyout

October 11, 2011

(Updates stock price in eighth paragraph.)

Oct. 11 (Bloomberg) -- 99 Cents Only Stores, the operator of 289 U.S. discount shops, agreed to be acquired by Ares Management LLC and Canada Pension Plan Investment Board for about $1.6 billion in cash, concluding a six-month effort to find a buyer.

Members of the founding Gold/Schiffer family support the $22-a-share offer and will continue to hold a minority stake in the company, City of Commerce, California-based 99 Cents Only said today in a statement.

99 Cents Only had considered a buyout and other options since April, a month after Leonard Green & Partners LP and the founding family offered to take it private for about $1.34 billion. Dollar stores have become takeover targets as they lure consumers who prefer quicker trips and smaller shops than Wal- Mart Stores Inc. locations when buying items such as toothpaste and packaged foods.

The “acquisition price fairly values 99 Cents Only,” said Patrick McKeever, an analyst at MKM Partners in Stamford, Connecticut. He downgraded the shares to “neutral” from “buy.”

A higher offer isn’t likely from Leonard Green or other bidders since the Gold/Schiffer family owns about a third of the outstanding shares, McKeever wrote in a note to clients today.

No Debt

Michael Gennaro, chief operating officer of Los Angeles- based Leonard Green, didn’t immediately reply to telephone messages.

99 Cents Only, led by Chief Executive Officer Eric Schiffer, said it had $221.8 million in cash and marketable securities and no debt at the end of its fiscal first quarter. Sales in the period advanced 6.3 percent to $368.3 million.

99 Cents Only rose 4.4 percent to $21.39 at the close in New York. The shares have climbed 28 percent since March 10, the day before the company disclosed the offer from Leonard Green.

Family Dollar Stores Inc. last month named Edward P. Garden, chief investment officer of Nelson Peltz’s Trian Fund Management LP, to its board after Trian withdrew a $7.7 billion takeover offer for the second-largest U.S. dollar store chain.

Lazard Ltd. served as financial adviser to the special committee of 99 Cents Only’s board that evaluated strategic options.

--Editors: {Kevin Orland}, {James Callan}

To contact the reporter on this story: Chris Burritt in Greensboro at

To contact the editor responsible for this story: Robin Ajello at

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