NEW YORK – Bridgestone Corp. will decide by the end of the year whether to top Carl Icahn’s bid for Pep Boys after the billionaire investor raised his offer for the car-parts chain to more than $1 billion.
The Japanese tire maker will decide its next move within three business days, spokesman Fusamaro Iijima said Tuesday in an email.
Hours earlier, Icahn Enterprises escalated a bidding war with an $18.50-a-share cash proposal, which it said it will be willing to boost even further if Pep Boys does not increase the termination fee in its deal with Bridgestone.
The takeover battle for Pep Boys underscores the confidence Icahn and Bridgestone have in the U.S. auto-parts retailing industry, which has benefited from an aging vehicle fleet on American roads. The automotive retailer agreed to a sweetened, $17-a-share takeover offer from Bridgestone last week, following an earlier bid from Icahn.
Both Bridgestone and Icahn are seeking to expand their presence in the tire and automotive-repair sector by adding Pep Boys’ 800 locations across more than 30 states. Bridge-stone operates more than 2,200 tire and automotive centers in the country.
Icahn, meanwhile, plans to combine Pep Boys with the Auto Plus chain, which he acquired earlier this year.
Icahn’s increased offer sent Pep Boys’ stock up as much as 7.1 percent to $18.65 in late trading. Shares of the company, the full name of which is Pep Boys-Manny, Moe & Jack, had already gained 77 percent this year, largely driven by the bidding war. Bridgestone rose 0.5 percent to ¥4,155 as of 2:17 p.m.
Pep Boys trades at 64 times forward 12-month earnings, versus the 18 times average for U.S. auto retailers, according to data compiled by Bloomberg.
The company, based in Philadelphia, said in a statement that Icahn’s proposal was superior and gave Bridgestone until 5 p.m. New York time on Thursday to make another offer or terminate their agreement.
Icahn had previously said he is willing to pay at least $18.10 a share and was puzzled by Pep Boys’ board opting for the Bridgestone offer.
“We cannot understand the actions of the directors in that they know we were willing to offer a lot more than $17,” he said last week.