Carl Icahn has upped the tempo on his pursuit of Pep Boys-Manny Moe and Jack (NYSE:PBY) after tabling an $18.50 a share takeover bid for the company. The bid values the Philadelphia-based auto supply and repair chain at about $1 billion. The company’s board is in agreement that Icahn’s offer constitutes a superior proposal as outlined in its agreement and merger with Bridgestone Retail Operations LLC.
Icahn Enterprises Concerns over Breakup Fee
Pep Boys-Manny Moe and Jack (NYSE:PBY) has consequently issued a notice to Japan Based Bridgestone to top Icahn Enterprises bid and if not possible, terminate the agreement. Icahn, on the other hand, has insisted he will only pay the $18.50 a share offer if the breakup fee does not exceed $39.5 million. Icahn’s offer is also not subject to any due diligence, financing or antitrust conditions.
The $18.50 a share is an improvement from the $18.10 offer that Icahn had said he would pay for the company. It is also much superior to the $17 a share offer that Bridgestone tabled valuing the company at about $950 million. Bridgestone acquiring Pep Boys would have bolstered its tire stores with 801 new stores and garages spread across 35 states.
Growing Confidence on US Auto Parts Business
Bridgestone could be forced to offload Pep Boys-Manny Moe and Jack (NYSE:PBY) Retail parts business should it end up victorious in the fierce tussle with Icahn Enterprises. The tussle for Pep Boys underscores the confidence the two have in the US auto parts retailing business, which continues to benefit from an aging vehicle fleet.
Icahn Enterprises and Bridgestone are seeking to expand their footprint in the automotive repair sector by adding new locations. Icahn acquired a 12.12% stake in Pep Boys in December having reiterated that the company’s retail automotive parts business would be a perfect fit for his other company Auto Plus.
Pep Boys-Manny Moe and Jack (NYSE:PBY) retail business accounts for about 20% of its $2 billion annual sales. Founded in 1921, the company has more than 800 locations dealing with everything from tires to air fresheners. The company has however not had the best of runs in the recent past having come under pressure amid weakness in its tire business.
