NEW YORK – Wall Street activist investor Carl Icahn won a bidding war Wednesday for U.S. auto service chain Pep Boys with an all-cash $1 billion deal after Japanese tire giant Bridgestone pulled out.
Icahn, who is expected to split the company and merge its retail side with his Auto Plus car parts network, offered $18.50 a share, or $1.03 billion, on Monday to buy Pep Boys, topping Bridgestone’s sweetened Dec. 24 proposal of $17 a share.
On Tuesday, the world’s largest tire maker said it would not counter the bid from Icahn Enterprises, abandoning a merger deal agreed on with Pep Boys in October.
“This was a terrific opportunity to leverage the financial resources and industry knowledge of Icahn Enterprises to the benefit of Pep Boys’ customers, manufacturer partners and employees and further bolster our U.S. automotive footprint,” said Icahn, chairman of Icahn Enterprises, in a statement.
“Since our acquisition of Auto Plus, our wholly owned automotive aftermarket company, in June, we have been actively looking for an excellent synergistic acquisition opportunity like Pep Boys, which has enormous growth potential, strong brand recognition, and well-known, best-in-class customer service.”
The company, whose formal name is The Pep Boys — Manny, Moe & Jack — has more than 800 automotive service and parts outlets in 35 U.S. states and Puerto Rico.
Bridgestone first sealed a takeover deal with Philadelphia-based Pep Boys in October at just $15 a share, seeking to bolster its own 2,200 tire outlets across the U.S.
Icahn Enterprises said it would pay Pep Boys’ breakup fee of $39.5 million to Bridgestone.
The merger agreement was unanimously approved by the boards of both Pep Boys and Icahn Enterprises. The transaction is expected to be completed in the first quarter of 2016.