Pep Boys (PBY) shares were sharply higher in early trading after activist investor Carl Icahn raised his bid to buy Pep Boys, trumping tire maker’s Bridgestone’s latest offer.
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Icahn Enterprises trumped Bridgestone – again – Monday evening by raising its Pep Boys bid to $18.50 a share.
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Shares of Pep Boys-Manny, Moe & Jack (The) (NYSE:PBY) rose by 11.1% in the past week and 12.68% for the last 4 weeks.
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Icahn Enterprises will also pay $39.5 million termination fee to Bridgestone.
The transaction, which is not conditioned on financing, is expected to close in the first quarter of 2016.
Investors had pushed Pep Boys shares higher than Icahn’s price in hopes of more bidding, with shares closing Tuesday up 9% to $18.95.
Shares of Pep Boys-Manny Moe and Jack (NYSE:PBY) opened at 17.41 on Tuesday. (TYO:5108), noting that Carl Icahn’s buyout offer is superior. Icahn’s offer had topped that by $1.50 a share and came with no due diligence or financing conditions attached.
After Bridgestone announced the tender offer in October, Pep Boys’ share price broke above $15 after hovering around $12 since the summer.
Icahn has said he plans to combine Pep Boys with the Auto Plus chain, which he acquired earlier this year. The aftermarket automotive service company will terminate the Bridgestone agreement given its refusal to match Icahn’s offer.
Icahn’s aggressive bidding reflects optimism in the US auto-parts retailing industry, which stands to benefit from an aging vehicle fleet on American roads.
Pep Boys stock was down 3 percent Wednesday morning, trading at $18.37 per share.
Nashville, Tennessee-based Bridgestone now operates a nationwide network of 2,200 tire and automotive service centers including 43 Firestone Complete Auto Care locations in New Jersey.
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The corporate takeover battle for Pep Boys isn’t over yet, but there’s already one clear victor – investors in the US automotive services chain. Rothschild is acting as exclusive financial advisor to Pep Boys and Morgan, Lewis & Bockius LLP is acting as its legal advisor. The deal values Pep Boys at almost $1.031 billion. Argus cut Pep Boys-Manny Moe and Jack from a “buy” rating to a “sell” rating and set a $15.00 price objective for the company.in a report on Tuesday, November 24th.
