The story begins two months ago when the Japanese tire manufacturer announced its intention to buy the company formally known as The Pep Boys – Manny, Moe & Jack. The offer was made at $15 per share for a total of $835 million. Then New York investor Carl Icahn jumped in with a higher bid and the two companies went back and forth until Icahn offered $18.50 per share, or approximately $1 billion total. Unwilling to beat Icahn's offer, Bridgestone has formally backed out.
That leaves Icahn poised to absorb the Pep Boys chain and all its 800 locations across 35 states (plus Puerto Rico). The operation could be integrated into or merged with existing Icahn operations, which include Federal-Mogul and the Auto Plus chain it acquired in June. Bloomberg predicts that Icahn may opt to retain the Pep Boys retail chain, but sell to Bridgestone the tire and service operations with which it was most interested in the first place.
NASHVILLE, Tenn., Dec. 29, 2015 /PRNewswire/ -- Bridgestone Americas, Inc. (Bridgestone) today announced that Bridgestone Retail Operations, LLC (BSRO), a wholly owned subsidiary of Bridgestone, will not present a counter offer to acquire The Pep Boys – Manny, Moe & Jack (Pep Boys; NYSE: PBY), in response to the most recent proposal from Icahn Enterprises L.P. of $18.50 per share.
Pep Boys Board of Directors Determines Latest Proposal From Icahn Enterprises Is Superior To Bridgestone Transaction
PHILADELPHIA, Dec. 28, 2015 /PRNewswire/ -- The Pep Boys – Manny, Moe & Jack (NYSE: PBY), the nation's leading automotive aftermarket service and retail chain, today announced that, on December 28, 2015, its Board of Directors, after consultation with its independent legal and financial advisors, determined that a proposal, received in the afternoon of December 28, 2015, from Icahn Enterprises L.P. to acquire Pep Boys for $18.50 per share in cash, constitutes a "Superior Proposal" as defined in the Company's agreement and plan of merger with Bridgestone Retail Operations, LLC.
As part of its proposal, Icahn Enterprises delivered to the Company a merger agreement signed by Icahn Enterprises that is not subject to due diligence or financing conditions.
As previously announced, on December 23, 2015, the Company was informed 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.
Also on December 28, 2015, the Company delivered notice to Bridgestone of the Pep Boys Board's determination and intention to effect a change of recommendation and to terminate the Bridgestone agreement. Such notice commenced a three business day period that will expire at 5:00pm New York City time on Thursday, December 31, 2015, during which the Company may not change the recommendation nor terminate the Bridgestone agreement, and Bridgestone has the right to make proposals to the Company.
As previously announced on October 26, 2015, the Company entered into the Bridgestone agreement pursuant to which Bridgestone commenced, on November 16, 2015, a tender offer for all outstanding shares of Pep Boys at $15.00 per share in cash. On December 11, 2015, the parties announced that the price per share had been increased to $15.50, and on December 24, 2015, the parties announced that the price per share had been increased to $17.00.
There can be no assurance that a transaction with Icahn Enterprises will result or that Bridgestone will propose any adjustments to the Bridgestone agreement. 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.
Rothschild is acting as the exclusive financial advisor to Pep Boys and Morgan, Lewis & Bockius LLP is acting as legal advisor.