Icahn wins bidding war for US auto parts retailer Pep Boys after Bridgestone backs off
31 December 2015
Activist investor Carl Icahn's Icahn Enterprises yesterday sealed a deal to buy US auto parts retailer Pep Boys - Manny Moe & Jack for about $1 billion after Bridgestone Corp abandoned the bidding war.
Japan's Bridgestone yesterday said that it would not raise its latest cash bid of $17 per share after Icahn Enterprises raised its offer of $18.50 per share in cash.
Pep Boys yesterday said it terminated the earlier announced proposed merger with Bridgestone Retail Operations, a US unit of Bridgestone, and signed a merger agreement with a subsidiary of Icahn Enterprises.
Icahn Enterprises will also pay $39.5 million termination fee to Bridgestone and the transaction is expected to close in the first quarter of 2016.
The auto parts retailer had been on the block since June, when it said it was considering selling itself under a strategic review and Icahn and Bridgestone had been in a bidding war and this week's offer was Icahn's third bid for the company, which included two moves to sweeten the deal this month.
Bridgestone had said on 26 October that it would acquire Pep Boys to boost its retail network by over a third in the US (See: Japan's Bridgestone to buy US auto parts retailer Pep Boys for $835 mn) and its last sweetened offer was $947 million.
Pep Boys' retail auto parts business will be a perfect fit for Auto Plus, an auto spare parts company that Icahn Enterprises bought in June, Carl Icahn said in a statement.
"We have been actively looking for an excellent synergistic acquisition opportunity like Pep Boys, which has enormous growth potential, strong brand recognition, and well-known, best-in-class customer service," he said.
Icahn Enterprises had acquired Auto Plus from Canada's Uni-Select Inc and also holds an 82-per cent stake in auto parts maker Federal-Mogul Holdings Corp.
Auto Plus has more than 270 locations and distributes auto parts with brands such as ACDelco auto parts and Valvoline motor oils, as well as private-label brands.
Pep Boys, based in Philadelphia, is one of the leading automotive aftermarket chains in the US.
With more than 7,500 service bays in more than 800 locations in 35 states and Puerto Rico, Pep Boys offers tyres, maintenance and repair and parts and accessories. It competes with larger rivals like AutoZone Inc and Advance Auto Parts Inc.