"The Pep Boys bidding process will likely continue into the New Year," with the winner likely breaking up the company and splitting the stores from the garages, analyst Ali Faghri told clients of Stern Agee & Co. in a report Thursday.
Billionaire investor Carl Icahn, a major Pep Boys shareolder, offered $16.50 a share for Pep Boys earlier this week, and told the company he was willing to raise it as high as $18.10 -- or more than $1 billion -- to beat Bridgestone:
-- Pep Boys says Bridgestone, whose last offer was $16 a share, has until 5 p.m. to outbid Icahn.
-- Icahn says Pep Boys has until 8 p.m. tonight to decide, or his offer is off the table.
Whether or not there's a decision tonight -- Bloomberg says Bridgestone has raised concerns about the form of Icahn's latest offer -- there will be one or more deals after the initial sale, notes Faghri:
-- If Bridgestone wins and keeps the garages for its Tennessee-based, 2,000 store Firestone chain, it may sell Pep Boys' retail stores to the O'Reilly Auto Parts chain, which wants more stores in the Northeast -- among other potential buyers, Faghri noted.
-- If Icahn wins and combines Pep Boys' retail stores with his newly-acquired, 230-store, Georgia-based Auto Plus chain, he may sell Pep Boys garages to Monroe Muffler, among other poential buyers, Faghri added.
-- (Or maybe Icahn and Bridgestone will just split Pep Boys...)