Private-equity firm Ares Capital Management has emerged as a bidder for deep-discount chain 99 Cents Only Stores, topping an offer from rival Leonard Green & Partners, The Post has learned.
Ares has made a binding offer believed to be in the range of $22 a share, and the firm is in talks with the board about signing a deal, two sources close to the situation said.
Shares of 99 Cents fell four cents yesterday to close at $18.50, putting the company’s enterprise value at $1.1 billion. Leonard Green, which has been pursuing 99 Cents for 18 months, also made a binding offer, but it appears its roughly $20-a-share proposal has come up short, one source said.
“Ares feels really good about the situation,” the source added.
99 Cents, Ares and Leonard Green reps didn’t respond to requests for comment.
PE firm Apollo Global Management had also been vying for the chain but dropped out several weeks ago after struggling to line up debt financing at what it considered to be acceptable terms.
Ares, formed in 1997 by former partners at Apollo, owns a number of well-known brands, including Simmons Mattress, Jacuzzi and retailer GNC.
That a third private-equity firm, Ares, is making a serious run at 99 Cents when financing for leveraged buyouts is hard to come by speaks to the allure of super discount chains during an economic slowdown.
In contrast, DuPont is having a hard time selling a chemical business with roughly $1 billion in revenue because PE firms are having difficulty raising debt financing, sources said.