Pep Boys Chooses Bridgestone Bid of $947 Million Over Icahn

Activist investor Carl Icahn raised his offer for USA auto parts maker Pep Boys-Manny Moe & Jack, topping Japanese tire maker Bridgestone Corp ‘s latest bid by US$1.50, to value the company at about US$1 billion.

Pep Boys had agreed Thursday to Bridgestone’s raised takeover offer of $17 a share, which had arrived just before a deadline to match or exceed Mr. Icahn’s earlier offer of $16.50 a share.

The Nashville-based tire maker also disclosed that Pep Boys’ board of directors recommended that shareholders accept the offer. But Pep Boys’ board has not claimed state “stakeholder” rights during the Icahn-Bridgestone bidding war.

For now Bridgestone’s hopes of owning Pep Boys are still alive.

The submitted negotiated transaction with Pep Boys “would not be subject to any due diligence financing, or antitrust conditions, according to the firm”.

In announcing the proposal, Icahn Enterprises said it would be willing to pay an even higher price, so long as Pep Boys doesn’t increase the termination fee in its deal with Bridgestone. However, Icahn Enterprises has no intention to increase its current $18.50 per share offer if Pep Boys agrees to any increase in the termination fee payable to Bridgestone. The company operates 2,200 US tire and vehicle service centers under the Firestone Complete Auto Care, Tires Plus, Hibdon Tires Plus and Wheel Works brands. The purchase will add approximately 800 locations to Bridgestone Retail Operations’ nationwide network.

The auto parts retailer has been on the block since June, when it said it was considering selling itself as part of a strategic review.

On October 26, Pep Boys entered into an agreement with Bridgestone to acquire all of its outstanding shares for $15 each in cash. The tiremaker will now pay roughly $947 million for the chain.