NASHVILLE, Tenn. — Bridgestone Americas Inc.'s bid to buy Pep Boys-Manny, Moe & Jack, originally disclosed Oct. 26, is back on track after it was sidetracked for three days by a counteroffer from Icahn Enterprises L.P.
Bridgestone's revised offer, for $15.50 a share, was endorsed unanimously by Pep Boys' board of directors on Dec. 11, the same day it was delivered to Pep Boys.
Icahn Enterprises — which owns 12.1 percent of Pep Boys outstanding shares and had suggested that the Philadelphia-based auto service chain would make an “excellent synergistic acquisition” opportunity for its own Auto Plus automotive aftermarket company — had not made a counter-counteroffer nor commented publicly on Bridgestone's move by the deadline for this issue.
Bridgestone's revised offer of $15.50 per share in cash — up 50 cents from its original offer — puts an aggregate equity value on Pep Boys of $863 million. The revised offer matches Icahn Enterprises' offer and provides approximately $28 million in additional cash consideration to Pep Boys shareholders, Bridgestone said.
Bridgestone said Dec. 11 that Pep Boys' board of directors “continues to unanimously recommend that Pep Boys shareholders accept its offer.” Additionally, Pep Boys' board of directors no longer deems Icahn Enterprises' offer made on Dec. 8 to be a “superior proposal” as defined in the agreement and plan of merger.
The new tender offer will expire at 5 p.m. EST on Jan. 4, unless extended, Bridgestone said.
“The joining of Bridgestone and Pep Boys combines the expertise of nearly 200 years and a proud heritage in the American automotive aftermarket industry,” said T.J. Higgins, president, consumer U.S. and Canada, Bridgestone Americas.
“Both of our companies take immense pride in the skill of our employees, those in the bays and behind the counters of our stores. Bringing that technical talent together with our shared dedication to customer service will create a better, not just bigger, tire and automotive service retailer, and one that is positioned to best meet consumer needs.”
Bridgestone, through the TAJ Acquisition Co. subsidiary set up by Bridgestone Retail Operations L.L.C. to effect the purchase, anticipates it will need about $895 million to complete the deal — $863 million to cover the purchase of 55.7 million outstanding shares of Pep Boys and the rest to cover various fees and expenses related to the offer.
In documents filed outlining the offer, Bridgestone said it expects to be able to pay for the transaction “through available cash or advances by Bridgestone Americas Inc. Consummation of the offer is not subject to any financing condition.”
The closing price of a share of Pep Boys' stock on Dec. 11 was $16.34.
Pep Boys operates more than 800 retail locations with 7,500-plus service bays in 35 states and Puerto Rico, including 234 tire-centric Service & Tire stores. Fiscal 2014 sales were $2.08 billion.
The acquisition will boost Bridgestone Americas' retail presence in the U.S. to more than 3,000 locations, which operate under the Firestone Complete Auto Care, Tires Plus, Hibdon Tires Plus and Wheel Works brand banners.
In making its bid for Pep Boys, Icahn Enterprises stressed its interest in Pep Boys' retail auto parts business — which represents up to a third of the retailer's $2 billion in annual sales — and how it would fit with its own Auto Plus business.
Auto Plus is the retail band name of Kennesaw, Ga.-based IEH Auto Parts L.L.C., which describes Auto Plus as a leading distributor of replacement parts, equipment, tools, accessories, paint and related products in the automotive aftermarket.
Icahn Enterprises, which is indirectly controlled by venerated Wall Street investor Carl Icahn, said in its tender offer filing that it intended to discuss with Pep Boys and “various parties that participated in the Issuer's strategic alternatives review process” regarding potential transactions involving the retail segment.
D.F. King & Co. Inc. is acting as information agent for Bridgestone in the tender offer. American Stock Transfer & Trust Co. L.L.C. is acting as depositary and paying agent in the tender offer. J.P. Morgan Securities L.LC. is acting as dealer manager in the tender offer.
Requests for documents and questions regarding the tender offer may be directed to D.F. King at 212-269-5550 or 866-620-2536, or by email at [email protected] J.P. Morgan Securities may be contacted at 877-371-5947 or 212-622-4401.
J.P. Morgan Securities L.L.C. is acting as the exclusive financial adviser to Bridgestone.
Jones Day is acting as legal adviser to Bridgestone. Rothschild is acting as the exclusive financial adviser to Pep Boys. Morgan, Lewis & Bockius L.L.P. is acting as legal adviser to Pep Boys.