PHILADELPHIA (Dec. 9, 2015) — Pep Boys – Manny, Moe & Jack's board of directors is evaluating the efficacy and ramifications of Icahn Enterprises L.P.'s $15.50 per-share offer for the firm's outstanding stock but has not changed its recommendation with respect to Bridgestone Americas' recent offer.
In what is perceived as a technical maneuver, Philadelphia-based Pep Boys' board, after consulting with its independent legal and financial advisers, determined that the Icahn proposal would “reasonably be expected to result in a ‘superior proposal,'” as defined in the company's agreement and plan of merger with Bridgestone Retail Operations L.L.C.
Publicly making this declaration allows the Pep Boys board “to take certain actions, in accordance with the procedures set forth in the Bridgestone agreement, to further consider the Icahn proposal.”
In and of itself, however, Pep Boys said this determination does not allow it to “terminate the Bridgestone agreement nor enter into a definitive transaction with the Icahn group, both of which can also only occur in accordance with the procedures set forth in the Bridgestone agreement.”
The board stressed in a statement that it “has not changed its recommendation with respect to the Bridgestone transaction, nor is it making any recommendation with respect to the Icahn proposal.”
Further, the board stated there can be no assurance that it ultimately will determine that the Icahn proposal is a “superior proposal,” that the terms of a transaction with Icahn will be the same as those reflected in its proposal or that any transaction with Icahn will be agreed to or consummated.
Icahn Enterprises already owns a 12.1-percent stake in Pep Boys.
As announced on Oct, 26, Pep Boys entered into an agreement with Bridgestone that led to Bridgestone's commencing on Nov. 16 a tender offer for all outstanding shares of Pep Boys at $15 per share in cash.
The closing of the Bridgestone tender offer is subject to Pep Boys' shareholders' tendering at least a majority of the company's outstanding shares, determined on a fully diluted basis, and other customary closing conditions.
Rothschild Group is the exclusive financial adviser to Pep Boys and Morgan, Lewis & Bockius L.L.P. is the firm's legal adviser.
Pep Boys' board initially said Icahn Enterprises' bid of $15.50 a share — or 50 cents more than the offer Bridgestone Americas is offering — potentially could “frustrate” its ability to maximize shareholder value.
In the event the Pep Boys board would change its recommendation in support of the transaction with Bridgestone to that of a competing proposal, that would trigger language that likely would result in Pep Boys' having to pay Bridgestone a $35 million termination fee.
Pep Boys operates more than 7,500 service bays in over 800 locations in 35 states and Puerto Rico.