Icahn offers to buy Pep Boys outright

NEW YORK (Dec. 7, 2015) — Icahn Enterprises L.P. is proposing to buy all of Pep Boys – Manny, Moe & Jack's outstanding shares for $15.50 a share — or 50 cents more than the offer Bridgestone Americas is offering — but Pep Boys is concerned the offer potentially could “frustrate” its ability to maximize shareholder value.  

“This proposal is NOT subject to any due diligence, financing or antitrust conditions,” according to a letter to Pep Boys signed by Keith Cozza, CEO of Icahn Enterprises, “and we are prepared to enter immediately into the exact same merger agreement that Pep Boys executed with Bridgestone Retail Operations L.L.C.

“In addition, we will enter into any reasonable further agreements that you may require in order to provide greater certainty of closing,” Icahn Enterprises said.

Mr. Cozza said his company believes its proposal is “clearly superior” to Bridgestone's $15 per-share offer and said that Icahn's “financial wherewithal to close expeditiously is indisputable.”

Mr. Cozza said Icahn Enterprises is prepared to meet with Pep Boys' board of directors immediately to negotiate and document this transaction.The offer translates into about $837 million for Pep Boys outstanding shares; Icahn Enterprises already spent $95 million in recent weeks to buy 6.56 million shares.

In a separate schedule 14D9 filing with the SEC, Pep Boys acknowledges receipt of the offer and notes that it previously held discussions with Icahn Enterprises (identified in Bridgestone's tender offer as “party H”) over a period of six months earlier in 2015 but that these discussions did not result in an offer that Pep Boys deemed superior to Bridgestone's offer.

“Notably, on Oct. 22, 2015, Icahn declined to increase its previously delivered $13.50 per-share proposal for the Company,” Pep Boys said, “and, since that date, Icahn has not presented the company with any subsequent proposal.”

Furthermore, Icahn Enterprises on Dec. 4 made a Hart-Scott-Rodino antitrust filing “in order to further preserve its flexibility,” according to Pep Boys' 14D9 filing.

This notice disclosed Icahn's “good faith intention,” Pep Boys said, dependent upon various factors including market conditions, to acquire in excess of a majority of Pep Boys' outstanding voting securities. 

However, the Philadelphia-based auto service provider said, the Schedule 13D filed by Icahn reserved its right to propose a variety of other transactions involving Pep Boys in order to achieve its stated interest in acquiring Pep Boys' retail business.

“These notices have raised concerns that Icahn may be taking these actions to obtain negotiating leverage in its discussions with third parties regarding Icahn's potential purchase of Pep Boys' retail business and, as a result, Pep Boys shareholders' ability to realize the value presented by the Bridgestone offer may be frustrated.”

Icahn Enterprises letter to Pep Boys comes just three days after the investment company disclosed it had purchased 12.1 percent of Pep Boys' outstanding shares as a prelude to discussing the possibility of integrating Pep Boys' retail auto parts business with Icahn's Auto Plus parts distribution business.