Billionaire investor Carl Icahn offered to buy Pep Boys - Manny Moe & Jack for about $863 million, topping a proposal from a unit of Bridgestone Corp.
The $15.50-a-share offer isn’t subject to due diligence, financing or antitrust conditions, according to a letter from Icahn Enterprises included in a filing on Monday. The firm offered to enter immediately into the exact merger agreement that Pep Boys executed with Bridgestone, which proposed a deal at $15 a share, or roughly $835 million.
The move sets up a showdown between Icahn and Bridgestone, which agreed to buy the Pep Boys retail chain in October. Bridgestone already operates more than 2,200 tire and automotive centers across the U.S., and the merger would create the world’s largest chain of its kind.
A Pep Boys representative didn’t immediately respond to a voicemail message.
Pep Boys shares held steady after Icahn’s bid was announced. The stock already had gained as much as 5.2 percent on Monday after Icahn disclosed a 12 percent stake in the company, then pared its gains. The shares traded up 1.7 percent to $15.95 at 2:18 p.m. in New York.
Icahn on Friday said that Pep Boys should sell its retail business to Auto Plus, a competitor he owns, saying the combination “presents an excellent synergistic acquisition opportunity." The activist investor said at the time that his representatives had and would continue to have talks with Pep Boysregarding “potential transactions” involving its retail segment.
Pep Boys on Monday confirmed that it had received notice of Icahn’s investment and said it may threaten shareholders’ ability to benefit from the Bridgestone deal. Pep Boys also identified Icahn as the party that it disclosed in merger documents that had made a $13.50-a-share offer for the company. Icahn on Oct. 22 declined to increase that bid and hadn’t since provided the company with a new proposal, Pep Boys said.
Auto Plus is an aftermarket parts supplier that Icahn acquired this year from Canada’s Uni-Select Inc. for about $340 million, and which he is using to drive consolidation in the industry. The company aims to be one of the largest automotive aftermarket companies in the U.S. in the next five years, according to its website.
Icahn Enterprises is a publicly traded master-limited partnership that holds stakes in the billionaire activist’s investments in industries including autos, energy, metals, rail cars, casinos, food packaging, real estate and home fashion. Icahn, 79, is worth about $21 billion, according to the Bloomberg Billionaires Index, and primarily invests his own fortune, rather than relying on money from outsiders.
Pep Boys is just one of many automotive parts and services companies to receive buyer interest. Private equity firm HGGC recently closed a deal for car dealer technology MotoFuze. Before that, Shipson Equity Holdings LLC picked up Compass Automotive Group LLC.
--Additional reporting by Allison Collins.