Icahn sweetens Pep Boys offer with vow to top Bridgestone

Pep Boys agreed to a US$947 million (RM4.065 billion) takeover offer from Bridgestone Corp, shunning a competing bid from billionaire investor Carl Icahn that had promised a higher price. On Monday, Pep Boys said it determined Icahn’s new $16.50-a-share bid was superior.

Bridgestone Americas Inc. has boosted its offer to buy control of Pep Boys – Manny, Moe & Jack to $17 a share – $1.50 more than its previous offer – and disclosed that Pep Boys’ board of directors recommends that shareholders accept the offer.

Earlier this year, Pep Boys made a decision to put itself for sale, and two months back, it agreed to sell itself to Bridgestone for $15 per share. Its offer of over $1 billion valued the retailer at about 14 times its trailing EBITDA over the past year, a multiple the company hasn’t been able to mark off since six years.

According to the new agreement with Bridgestone, Pep Boys seems to be happy to go with a lower bid to complete the tie-up with the Tokyo based company.

Also on December 22, Pep Boys delivered notice to Bridgestone of the board’s determination and intention to effect a change of recommendation and to terminate the Bridgestone agreement. Under the deal, Bridgestone is likely to provide almost $84 million in additional cash to Pep Boys’ shareholders.

PBY closed Thursday’s trading at $17.51, up $0.11 or 0.63 percent on a volume of 465,369 shares. If victorious, Bridgestone will add more than 800 stores to its retail network, giving it more than 3,000 company-owned outlets in the USA and Puerto Rico. This excludes shares tendered pursuant to the guaranteed delivery procedures provided for in the offer, and represents approximately 0.08% of the total outstanding shares of common stock of Pep Boys. Mr. Icahn believes that Pep Boys’ auto-parts arm will prove to be an “excellent synergistic acquisition opportunity” for Auto Plus.