Only days after Bridgestone Retail Operations, a wholly owned subsidiary of Tokyo based Bridgestone Tire, on December 24, raised its offer to acquire Pep Boys to $17 per share in cash, or $947 million, a subsidiary of Icahn Enterprises L.P. trumped that with a $18.50 per share offer last Monday. The latest bid for $18.50 per share values Pep Boys at approximately $1.031 billion. The merger agreement has been unanimously approved by the Boards of Directors of both companies.
The Pep Boys board announced in a news release last week that it had determined the Icahn offer was superior to Bridgestones and will pay a termination fee to Bridgestone to end their agreement. Bridgestone has now bowed out, saying it would not counter Carl Icahn's raised offer to buy Pep Boys.
Bridgestone's initial offer, in late October, was for $16 per share or $835 million. Icahn then followed by upping this offer to $16.50 per share. Icahn said Pep Boys' retail automotive parts business would be a perfect fit for Auto Plus, a competitor he owns.
According to its website, Auto Plus distributes Valvoline and Lucas Oil products.
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 U.S. automotive footprint, said Carl C. Icahn, Chairman of Icahn Enterprises. Since our acquisition of Auto Plus, our wholly-owned automotive aftermarket company, 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.
We are very pleased to have reached this agreement, which delivers outstanding value to Pep Boys shareholders, provides new opportunities for Pep Boys employees and allows Pep Boys to benefit from the significant expertise and resources of Icahn Enterprises, said Scott Sider, CEO of Pep Boys. 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. I am confident in Pep Boys strong future growth prospects as an Icahn Enterprises portfolio company.
The transaction, which is not conditioned on financing, is expected to close in the first quarter of 2016. Under Pep Boys previous merger agreement with Bridgestone Retail Operations, Icahn Enterprises paid, on behalf of Pep Boys, a termination fee of $39.5 million to Bridgestone.
The Pep Boys: Manny, Moe & Jack generally abbreviated as Pep Boys, was founded in 1921 by four friends who chipped in $200 apiece to open an auto parts store in Philadelphia, Pennsylvania where the company continues to be headquartered.
Since then, Pep Boys has expanded into a full service automobile parts aftermarket retail chain. The company operates more than 800 stores and 7,500 service bays for auto repair in 35 United States and Puerto Rico. Philadelphia-based Pep Boys sales tires and parts and accessories along with providing maintenance and repairs. One fifth of Pep Boys is still owned by the Strauss and Rosenfeld families, two of the original founding partners.
According to its website, Pep Boys offers Mobil, Pennzoil and Castrol brands when performing motor oil changes.
