December 09, 2015
A bidding war may be on for Pep Boys.
The Philadelphia-based auto service chain announced Wednesday that it will scrap its planned $835 million merger with Bridgestone and go with an offer from billionaire Carl Icahn instead – unless Bridgestone comes up with a better offer by Friday.
"The proposal from Icahn Enterprises L.P. to acquire Pep Boys for $15.50 per share in cash constitutes a 'Superior Proposal' as defined in the Company’s agreement and plan of merger with Bridgestone Retail Operations, LLC," the company said in a statement.
Bridgestone made a deal to buy Pep Boys for $15 a share in October, but Icahn jumped in this week and offered $15.50 a share instead. That would raise the price of the deal from $835 million to a little less than $863 million.
The Japanese tire company has until 5 p.m. on Friday to respond with a counter-offer. Until then, the company said, there will be "no assurance" that Pep Boys will or will not accept Icahn's offer.
"The Pep Boys Board has not changed its recommendation with respect to the Bridgestone transaction, nor has it made any recommendation with respect to the Icahn proposal," the company said.
Bridgestone told the Wall Street Journal on Tuesday that it had made "swift and certain progress" in the acquisition and expected to finish the deal in a month.
Pep Boys' stock, meanwhile, has been jumping in response to the news. It opened at $16.21 on Wednesday.
Icahn, a titan within investor circles, is known, among other things, for his plans to buy the bankrupt Trump Taj Mahal in Atlantic City for $100 million. He has long eyed Pep Boys, since the deal could help his company Auto Plus, although the company refused his previous offer of $13.50 a share.
On Friday, he disclosed that he owns around one-eighth of the company's shares, giving him further leverage in a deal.