PHILADELPHIA (Dec. 29, 2015) — Icahn Enterprises L.P. has raised its offer for Pep Boys – Manny, Moe & Jack by $2 a share to $18.50, topping Bridgestone Americas Inc.'s last bid by $1.50 and pushing the equity value of Pep Boys past $1 billion.
Pep Boys' board of directors has declared the bid a “superior proposal” and notified Bridgestone of its intention to terminate its Dec. 24 agreement with the Nashville, Tenn.-based tire maker.
Icahn Enterprises' latest bid, which exceeds its offer of Dec. 18 to match any Bridgestone bid up to $18.10, will expire at 5 p.m. EST on Dec. 31, Pep Boys said. The $18.50 bid values Pep Boys at $1.03 billion based on 5.57 million outstanding shares. Icahn already owns 12.1 percent of Pep Boys' shares.
The Philadelphia-based tire and auto service provider and auto parts retailer also disclosed that the Federal Trade Commission had granted early termination of the waiting period under the HSR Act with respect to a potential transaction with Icahn Enterprises.
Pep Boys' earlier agreements with Bridgestone include a termination fee payable to Bridgestone under certain circumstances, including a termination in order to enter into a superior proposal by a third party. That fee was increased to $39.5 million from $35 million in Bridgestone's offer of Dec. 24.
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.
Bridgestone issued a statement saying it is "aware that a third party has submitted a competing offer. Under the terms of the merger agreement, Bridgestone has three business days to negotiate with Pep Boys to amend the merger agreement in response to any competing proposal that the Pep Boys board determines is superior.
"Any further decisions will be made based on what continues to make business and financial sense for Bridgestone and aligns with our long-term growth strategy."
Bridgestone Retail Operations L.L.C. has more than 2,200 retail locations throughout the U.S., which operate under the Firestone Complete Auto Care, Tires Plus, Hibdon Tires Plus and Wheel Works brand banners.
Icahn Enterprises has suggested that Pep Boys' retail auto parts segment would make an “excellent synergistic acquisition” opportunity for Auto Plus, an automotive aftermarket company wholly owned by Icahn Enterprises Holdings.