Pep Boys agrees to be bought by Icahn

Shares of the company, whose full name is Pep Boys – Manny, Moe & Jack, have gained 93 per cent this year, largely driven by the bidding war. It said it had informed Tokyo-based Bridgestone Corp. of Icahn’s boosted offer. The activist investor said he has been looking for a company to pair with Auto Plus, an auto parts distributer that Icahn Enterprises bought earlier this year.

Bridgestone would have had to spend additional funds on a scale of 20 billion yen ($164 million) to match Icahn’s winning offer. While that is in excess of the most recent Icahn bid for $16.50 per share, it was still below the maximum share price of $18.10 that Icahn said he would be willing to hand out.

“There are tremendous opportunities for Pep Boys and Auto Plus, a company that shares Pep Boys’ unwavering commitment to best-in-class customer service and solutions”, Sider added.

Bridgestone agreed in October to buy Pep Boys for $15 a share.

The all-cash transaction is not contingent on financing and values Pep Boys at $1.031 billion in aggregate value. It provides automotive tires, parts, accessories and services.

In a regulatory filing with the Securities and Exchange Commission (SEC), Icahn Enterprises indicated that its new proposal was submitted to the Board of Directors of Pep Boys today, December 28.

Bridgestone Americas executives have until late on New Year’s Eve to respond to Icahn Enterprises’ latest attempt to pry Pep Boys from its grasp. Zacks Investment Research upgraded shares of Pep Boys-Manny Moe and Jack from a “hold” rating to a “buy” rating and set a $17.00 price target on the stock in a report on Wednesday, November 18th.

Many are speculating that Icahn is hoping to create synergies between Pep Boys and Canadian auto parts chain Auto Plus, as well as tier-one automotive supplier and parts maker Federal Mogul. Bridgestone’s offer was valued at $947 million, or $17 per share.