Icahn Enterprises LP, billionaire Carl Icahn's investment firm, and Pep Boys -- Manny, Moe & Jack, the iconic but profit-challenged, 801-store, North Philadelphia-based auto parts, tires and repair garages chain, said this morning they have cut a deal for Icahn to buy Pep Boys for $18.50 a share, or $1.03 billion.

The price is an extra $3.50 a share -- and about $150 million -- more than Firestone stores owner Bridgestone agreed to pay for Pep Boys in October. Under terms of the new deal, Icahn will pay Bridgestone $39.5 million to go away. (Bridgestone said last night it won't beat Icahn's offer.) The Icahn and Pep Boys boards have approved the cash deal unanimously.

Pep Boys will "benefit from the significant expertise and resoruces of Icahn Enterprises," added Scott Sider, Pep Boys' CEO. "I am confident in Pep Boys' strong future growth prospects" as part of Icahn.

Buyer and seller expect to close the deal by March. Philadelphia law firm Morgan, Lewis & Bockius advised Pep Boys on the sale and Philadelphia's Drinker Biddle & Reath joined Proskauer Rose advising Icahn.