Icahn: I'll pay up to $1 billion, '10 cents more,' for Pep Boys
Bridgestone has until midnight Christmas Eve
This morning, Pep Boys – Manny, Moe & Jack, the Philadelphia auto service chain with 800 stores and garages, said investor Carl Icahn's latest proposal to buy the company, for $16.50 a share, beats the previous offer from Bridgestone Retail Operations LLC.
Icahn has also pledged to pay "10 cents more per share" than Bridgestone, "up to a maximum of $18.10," which would bring the value of the deal above $1 billion.
Pep Boys says Bridgestone has until 5 p.m. tomorrow (Christmas Eve) to beat Icahn's offer. Icahn says Pep Boys has until 8 p.m. that night to accept it or his proposal expires..
Bridgestone agreed in October to pay $15 a share, or more than $800 million, for Pep Boys, which reports sale of over $2 billion a year but is only marginally profitable.
Bridgestone wants to join Pep Boys' garages, tire and fleet-service operations, which have reported modest growth, to its 2,000 Firestone stores, based in Tennessee. That deal would likely lead to layoffs or relocations for many of Pep Boys' 500 employees at its Allegheny Ave. headquarters.
Icahn wants to combine Pep Boys' retail stores, whose sales have been flat, with his smaller AutoPlus chain, based in Georgia, which he bought earlier this year. Regional parts retailers face stiff competition from a few large national chains like AutoZone.
Could Pep Boys' competing bidders work out a common deal, with Icahn buying Pep Boys' stores and Bridgestone buying the garages?
Since Icahn is also a major Pep Boys shareholder, he has some incentive to push Bridgestone's offer price higher, notes Robert Costello, head of $100 million-asset Costello Asset Management in Huntingdon Valley.