Pep Boys affirms Icahn’s winning bid in takeover battle with Bridgestone
Auto services chain has ‘enormous growth potential’
Pep Boys — Manny, Moe & Jack designated Carl Icahn the winner in the takeover duel for the auto services chain Wednesday after Bridgestone declined to top the activist investor’s $18.50a-share offer.
Philadelphia-based Pep Boys said it terminated the previously announced acquisition deal with Bridgestone Retail Operations, a U.S. unit of Japan tire maker Bridgestone, and signed a merger agreement with a subsidiary of Icahn Enterprises, the New York billionaire’s holding company.
Pep Boys shares closed 2.90% lower at $18.39 on Wednesday, dipping below the price of Icahn’s winning offer after soaring above the bid in Tuesday trading, apparently in anticipation of a higher bid from Bridgestone. Icahn Enterprises simultaneously paid Bridgestone a $39.5 million termination fee on behalf of Pep Boys, the company said.
The all-cash transaction is not contingent on financing and values Pep Boys at $1.031 billion in aggregate value. The deal has been unanimously approved by the director boards of both companies and is expected to close in the first quarter of 2016.
Pep Boys operates 800 auto service and tire centers or super centers in 35 states and Puerto Rico.
Icahn in a written statement said he would link the company with Auto Plus, the rival auto parts and services chain with 270 U.S. locations that his company acquired in June.
“We have been actively looking for an excellent synergistic acquisition opportunity like Pep Boys, which has enormous growth potential, strong brand recognition and well-known, best-in-class customer service,” he said.
Pep Boys CEO Scott Sider in a separate statement said the transaction provides new opportunities to company employees and “delivers outstanding value to Pep Boys’ shareholders.”
Pep Boys investors, including Icahn, who in early December disclosed a 12.1% stake in the company, have benefited from a nearly 93% year-todate value gain in the firm’s shares.