99 Cents Only Stores on Tuesday said that it signed a definitive agreement to be acquired by affiliates of Ares Management LLC and the Canada Pension Plan Investment Board for about $1.6 billion.

The Los Angeles discount chain turned down an earlier $1.34 billion bid from West L.A.’s Leonard Green & Partners L.P. Ares Management of Century City, and CPPIB of Toronto are offering shareholders $22 per share versus Leonard Green’s earlier $19.09 offer. The offer is 7.3 percent higher than Monday’s closing price.

The per-share price also is a 32 percent premium to 99 Cents Only’s closing price on March 10, the day prior to the company’s announcement that it had received the Leonard Green offer. The board formed a special committee in April to evaluate that offer and any competing bids.

“We believe that 99 Cents Only Stores is a franchise company, and we look forward to working closely with the company’s management team and dedicated employees to continue to expand the business in order to successfully increase the company’s attractive current market position,” said David Kaplan, an Ares Management senior partner and founding member.

Ares Management over the years has made investments in a variety of retail and consumer product companies, including General Nutrition Centers, Maidenform Brands and Serta & Simmons Bedding Co.

As with the Leonard Green bid, existing management, which includes members of Gold-Schiffer family, will continue to run the company. The family, which founded 99 Cents Only in 1982, has agreed to roll over its 33 percent stake into the newly private company. The deal is expected to close during the first quarter of next year.

Chief Executive Eric Schiffer, Chief Operating Officer Jeff Gold and Executive Vice President Howard Gold will continue in their current roles and serve as directors. Founder David Gold will serve as chairman emeritus.

“I am pleased to announce this agreement as it delivers significant value to our shareholders,” said Eric Schiffer in a statement. “We have come to know and respect Ares Management and CPPIB through this process, and we believe they will be excellent partners and help us achieve our long term goals as a company.”

RBC Capital Markets and BMO Capital Markets provided committed financing and acted as financial advisors to Ares Management and CPPIB. The financing is expected to consist of a $150 million asset-based lending a $525 million first lien term facility and $250 million bridge facility, according to advising law firm Paul Hastings LLP.

Lazard Freres & Co. LLC acted as financial advisor to the board's special committee, Guggenheim Securities, LLC and Skadden, Arps, Slate, Meagher & Flom LLP were advisors to the Gold/Schiffer family.

Proskauer Rose LLP acted as legal advisor to the acquiring entity and Ares Management, and Torys LLP acted as legal advisor to CPPIB. Munger, Tolles & Olson LLP acted as counsel to the company. Morrison & Foerster LLP acted as the committee's legal counsel.

Shares closed up 90 cents, or 4.4 percent, to $21.39 on the New York Stock Exchange.

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