Pep Boys agreed to be acquired by Carl Icahn for more than $1 billion after Bridgestone Corp. backed down from a bidding war with the billionaire investor.
The auto-parts chain said Dec. 30 that it terminated an earlier merger pact with Bridgestone and signed a definitive agreement to be bought by Icahn Enterprises for $18.50 a share. Icahn’s investment firm also will pay Bridgestone a $39.5 million termination fee on behalf of Pep Boys.
Icahn’s aggressive bidding reflects optimism in the U.S. auto-parts retailing industry, which stands to benefit from an aging vehicle fleet on American roads. Both companies were seeking to expand their presence in the tire and automotive-repair sector by adding Pep Boys’ 800 locations across more than 30 states.
Bridgestone operates more than 2,200 tire and automotive centers in the United States. Icahn, meanwhile, plans to combine Pep Boys with the Auto Plus chain, which he acquired earlier this year. Analysts have speculated that Icahn may only be interested in Pep Boys’ retail operation and would plan to sell the tire and services division to other interested parties such as Bridgestone.
Fusamaro Iijima, a spokesman for Bridgestone, declined to comment on the company’s next steps, including whether it would seek to buy part of the Pep Boys operations from Icahn.
Bridgestone’s shares rose the most in two weeks in Tokyo after the tire maker said it wouldn’t counter Icahn’s $18.50-a-share bid — a sign investors were relieved the company won’t overpay for the business. Icahn Enterprises had said it would be willing to boost its proposal even further if it needed to.
