Bridgestone backs out of bidding war over auto parts retailer Pep Boys

That was up $2 per share from Icahn’s earlier bid and $1.50 better than the latest from Bridgestone.

The company, whose formal name is The Pep Boys – Manny, Moe & Jack – has more than 800 automotive service and parts outlets in 35 USA states and Puerto Rico.

As part of the deal with Pep Boys, Icahn will pay a termination fee of $39.5 million to Bridgestone. His activity and opinions are closely watched in the investing community, and on Icahn’s favorable comments on Apple Inc.in 2013, the stock went up 5 percent. The activist investor is now willing to purchase the automotive aftermarket service and retail company for $18.50 per share in cash, up from his $16.50 per share bid last week.

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

Japanese tire-maker Bridgestone said in a news release late Tuesday that it would not counter Icahn Enterprises’ latest offer of about $1 billion.

Bridgestone has increased its offer to buy control of Pep Boys from $15.50 to $17.00 per share in cash which will provide “approximately $84 million in additional cash consideration to Pep Boys shareholders”.

According to Pep Boys, it delivered a notice to Bridgestone about the company’s intent to alter its recommendation and to end the agreement with Bridgestone based in Japan.

Pep Boys sales are lower now than they were in 2006, and profitability has declined in recent years.

Pep Boys has underperformed its peers and may require an overhaul, said James Albertine, an analyst at Stifel Financial Corp. “Based on its prior actions, Bridgestone may seek to regain its favored status by merely matching, rather than exceeding the Icahn Enterprises offer, ‘ Efraim Levy, an analyst with S&P Capital IQ, said in a note to clients Tuesday”.

The stock price of Pep Boys surged 8.85% to $18.95 per share on Tuesday.

Icahn and Bridgestone had been in a bidding war for Pep Boys and yesterday’s offer was Icahn’s third bid for the company, which included two moves to sweeten the deal this month.