Bridgestone says it won't top Icahn offer for Pep Boys
Carl Icahn appears to have emerged as the winner of the bidding war for Philadelphia-based auto parts and services retailer Pep Boys - Manny, Moe and Jack. Japanese tire-maker Bridgestone said in a news release late Tuesday that it would not counter Icahn Enterprises' latest offer of about $1 billion.
Shares of Pep Boys had hit their highest price in eight years earlier Tuesday, after the company received a sweetened offer from Icahn of $18.50 in cash per share. That was up $2 per share from Icahn's previous bid and $1.50 better than the latest offer from Bridgestone.
Late Tuesday, Bridgestone said it was bowing out of the bidding war, adding that it would not make an offer topping Icahn's latest.
As the takeover bid from Bridgestone Retail Operations L.L.C., a wholly owned subsidiary of Bridgestone, turned into a fight for control with Icahn, Pep Boys' stock has been rising steadily over the last two months.
The share price has jumped 94 percent from this time last year and rose almost 9 percent Tuesday to close at $18.94, a level not seen since the middle of 2007.
After Bridgestone said it would not make a counteroffer, the stock slumped more than 3 percent, to $18.32 in after-hours trading Tuesday.
Pep Boys has 801 outlets in 35 states, selling auto parts and offering vehicle maintenance: 567 Supercenter store/garage combinations and 234 service and tire garages, operating in parts of the country under the Discount Tire, Big 10, and Florida Tire brands.
Icahn has said he plans to combine Pep Boys with the Auto Plus chain, which he acquired earlier this year.
Rumors of a sale of Pep Boys emerged more than two years ago, with the exit of CEO Mike Odell and the arrival of three new board members who were nominated by a huge stakeholder in the company.
The company's tire business has been under pressure, and it has sought new ways to generate cash.
Pep Boys sales are lower now than they were in 2006, and profitability has declined in recent years.
The chain also owns 229 store locations, which the company says were appraised at $714 million last year, a sum equal to most of the proposed $17 share price Bridgestone had offered last week.
At Pep Boys' Allegheny Avenue corporate offices alone, 500 are employed.