Pep Boys Says Icahn Offer Is Superior, Moves to Terminate Bridgestone Deal

Icahn had said he would top any fresh Bridgestone offer by 10 cents per share, capping it at $18.10 per share.

Pep Boys said on Monday Icahn’s latest offer was superior to the deal it accepted from Bridgestone, and moved to terminate its agreement with the Japanese company.

Carl Icahn, Chairman of Icahn Enterprises said of the acquisition deal: “This was a terrific opportunity to leverage the financial resources and industry knowledge of Icahn Enterprises to the benefit of Pep Boys’ customers, manufacturer partners and employees and further bolster our usa automotive footprint”.

This agreement shows that Pep Boys are willing to accept a price that is lower to complete the union with Bridgestone, which is based in Tokyo that it agreed to originally back in October. While it is possible that another bidder could enter the arena, it seems likely that the company will in fact sell to Icahn for $18.50 per share. The initial offer of Bridgestone was for $15 per share. Bridgestone previously stated that acquiring Pep Boys would allow the company to increase its retail network by over 33% in the United States. The company’s tire business has been under pressure and it has looked for new ways to generate cash.

Pep Boys shares fell about 3 percent in morning trading on Wednesday, while Icahn Enterprises shares declined about 1 percent. The firm believes that it is contrary to the best interest of the all the shareholders of the automotive aftermarket service and retail company to agree to any increase of the termination fee payable to Bridgestone Retail Operations, LLC. Analysts anticipate that Pep Boys-Manny Moe and Jack will post $0.24 earnings per share for the current fiscal year.

Pep Boys-Manny, Moe & Jack (The) (NYSE:PBY) rose 8.79% or 1.53 points on Tuesday and made its way into the gainers of the day.

Icahn said in a statement that Pep Boys has “enormous growth potential”.

Photo of Carl Icahn courtesy of Reuters.