After making an offer to acquire Pep Boys for $17 per share, Bridgestone Retail Operations was outbid December 29 by New York City-based Icahn Enterprises L.P., which offered $18.50 per share for the automotive services provider.
Icahn, a holdings company engaged in various business segments, entered a definitive merger agreement with Pep Boys to purchase its shares through an all-cash transaction of approximately $1 billion in aggregate equity value, according to a joint press release from both companies.
This will be Icahns second venture in the automotive sector in less than a year, after it acquired the assets of Auto Plus in June 2015. Auto Plus is a U.S.-based distributor of replacement parts, equipment, tools, accessories and related products in the automotive aftermarket. Its website mentions that the company has locations in 48 states, and claimed that it is the sixth-largest aftermarket distributor in the U.S.
A filing with the U.S. Securities and Exchange Commission confirmed that on December 30, 2015, Pep Boys terminated its merger agreement with Bridgestone and accepted the higher offer from Icahn. Bridgestone announced in a press release that it would not present a counteroffer to increase the most recent proposal, effectively ending its bid for Pep Boys. Subsequently, Icahn paid Bridgestone a termination fee of $39.5 million on behalf of Pep Boys.
The transaction between Icahn and Pep Boys, which is not conditioned on financing, is expected to close in the first quarter of 2016, according to the joint press release.
In October 2015, Bridgestone announced plans to acquire Pep Boys for $15 per share, or $835 million – a deal that would have combined two large U.S. chains of automotive aftermarket service providers. Icahn made a counteroffer to Pep Boys to acquire its outstanding shares of common stock for $15.50 per share in cash.
Philadelphia-based Pep Boys has more than 7,500 service bays in more than 800 locations in 35 states and Puerto Rico. The company offers oil changes and other maintenance and repair services, along with parts and accessories.