Icahn Enterprises L.P. threw a monkey wrench into Bridgestone Retail Operations acquisition of Pep Boys by making a higher cash offer of $15.50 per share.
Bridgestone Retail Operations announced in October plans to acquire Pep Boys for $15 per share, or $835 million, in a deal that would combine two large U.S. chains of automotive after-market service providers. That offer was expected to close at the beginning of 2016. The merger agreement contains termination rights that stipulate that under certain circumstances, Pep Boys would be required to pay Bridgestone a termination fee of $35 million.
Pep Boys said yesterday that its board of directors determined the proposal from Icahn Enterprises to acquire it for $15.50 per share in cash would reasonably be expected to result in a superior proposal as defined in the companys agreement and plan of merger with Bridgestone Retail Operations LLC.
While the board can further consider Icahns proposal, this determination does not allow the company to terminate the Bridgestone agreement, nor enter into a definitive transaction with Icahn, both of which can also only occur in accordance with the procedures set forth in the Bridgestone agreement. Pep Boys board said it hadnt changed its recommendation on the Bridgestone offer, nor was it making any recommendations about the Icahn proposal.
Pep Boys confirmed in a U.S. Securities and Exchange Commission filing that it received a letter from Icahn Enterprises signed by its CEO, Keith Cozza, who stated he was writing on behalf of Icahns board of directors to make a proposal for a negotiated transaction whereby Icahn would acquire all of Pep Boys outstanding shares of common stock for $15.50 per share in cash.
This proposal is not subject to any due diligence, financing or antitrust conditions, and we are prepared to enter immediately into the exact same merger agreement that Pep Boys executed with Bridgestone Retail Operations LLC, Icahns CEO stated in the letter. In addition, we will enter into any reasonable further agreements that you may require in order to provide greater certainty of closing.
Philadelphia-based Pep Boys offers tires, maintenance and repair, parts and accessories. It would add about 800 locations to Bridgestones nationwide network of 2,200 tire and automotive service centers which operate under the Firestone Complete Auto Care, Tires Plus, Hibdon Tires Plus and Wheel Works brand banners.
New York City-based Icahn Enterprises is a diversified holding company engaged in 10 primary business segments, including automotive and energy.