Pep Boys moves to terminate Bridgestone deal, as Icahn raises bid to $1 bn

Full-service and tyre automotive aftermarket chain Pep Boys - Manny, Moe & Jack - said the board of the company had determined activist investor Carl Icahn's latest buyout offer was superior to a deal it had accepted from Bridgestone Corp.

Icahn's latest bid of $18.50 per share yesterday valued Pep Boys at about $1 billion, as against Bridgestone's S17 per share which valued the company at $947 million.

According to Pep Boys, its board had delivered a notice to Bridgestone to terminate their previous agreement with Bridgestone.

According to Icahn Enterprises, it would be willing to bid more than $18.50 per share for Pep Boys unless Pep Boys increased Bridgestone's termination fee of $39.5 million.

The offer from Icahn Enterprises is not subject to any due diligence, financing or antitrust conditions.

Icahn and Bridgestone had been in a bidding war for Pep Boys and yesterday's offer was Icahn's third bid for the company, which included two moves to sweeten the deal this month.

The auto parts retailer had been on the block since June, when it said it was considering selling itself under a strategic review.

Bridgestone had said on 26 October that it would acquire Pep Boys to boost its retail network by over a third in the US (See: Japan's Bridgestone to buy US auto parts retailer Pep Boys for $835 mn).

Icahn Enterprises said in a Securities and Exchange Commission filing that the new offer represented a negotiated transaction that would not be subject to any due diligence, financing or antitrust conditions.

The filing also criticised the provision in the Thursday agreement that would increase the termination fee payable by Pep Boys to Bridgestone from $35 million to $39.5 million for certain circumstances, including a termination for entering a superior proposal by a third party.

According to Icahn Enterprises, the provision "would prevent a truly robust auction.''