'Too much passion': Why Firestone owner let Carl Icahn buy Pep Boys
Could Bridgestone still add stores from Phila chain?
"Bridgestone Corp. CEO Masaaki Tsuya did something rare in Japanese business circles: He put corporate pride aside, and walked away from an escalating bidding war with corporate raider Carl Icahn for the U.S. auto parts chain Pep Boys," Bloomberg's Jie Ma and Yuki Hagiwara report here.
Bridgestone's refusal to overpay for Pep Boys last winter followed its own "unpleasant" $2.7 billion acquisition of Firestone -- way back in 1988, when Tsuya was a young Bridgestone manager, at a time when Japan's dominance of the global car and electronics industries gave giants like Bridgestone billions to buy American firms.
Outbidding Bridgestone (debt-fueled "financial" investors like Icahn often pay more, vs. "strategic" corporate buyers like Bridgestone), Icahn took Pep Boys private and has replaced top Philadelphia-based executives with leaders of his Auto Plus chain, based in Georgia.
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"The acquisition would have been a good fit for the Japanese tire maker," adding more than 800 Pep Boys-owned locations to Bridgestone's 2,200 Firestone and other U.S. stores.
But when Icahn bid the price more than $160 million above Bridgestone's first offer/$50 million+ above its last offer, it was too much, Tsuya confirmed: “It’s like selecting a husband for your daughter. You have to be skeptical and keep asking whether she has really made the right choice.”
No wonder, when Philadelphia-based Pep Boys went on the market, "Bridgestone showed restraint." It raised its initial $15 bid to $17, but let Icahn buy Pep Boys and merge it into his recently-acquired Georgia-based Auto at $18.50 a share, topping $1 billion.
"It's a decision we had made in advance so there was no hesitation from anybody," Tsuya told Bloomberg.
"Tsuya, who joined Bridgestone in 1976, was a junior member on the project team that worked on the Firestone acquisition. While the Firestone takeover helped Bridgestone expand, Tsuya said if he could do it all over again," he would have nickel-and-dimed the seller, instead of driving away competitors with Bridgestone's fat above-market bid. "It was like rushing into a marriage with too much passion," Tsuya concluded.