“Bridgestone and Pep Boys are two leading companies that share a proud heritage in the American automotive services industry”, Bridgestone Americas’ CEO Gary Garfield said in a news release. Bridgestone, known primarily for tires, is acquiring and merging with Pep Boys, an automotive service and parts retailer. The company’s market cap is $808.71 million.
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The acquisition of Pep Boys by Bridgestone will add 800 locations to its network of 2,200 retail stores.
Pep Boys stores don’t currently sell Bridgestone or Firestone tires, and Bridgestone says it is making production moves now to ensure adequate fill rates for its existing dealers, as well as the Pep Boys stores which will gradually integrate the tire brands into their inventories.
Scott Sider, CEO of Pep Boys stated that they are excited to join the Bridgestone family of firms to become part of the world’s largest firm-owned tire and automotive service retail network.
The acquisition accelerates the global growth strategy of Bridgestone Corp. the world’s largest tire and rubber company and parent of Bridgestone Americas. “We think Pep Boys will enable them to improve their service base”.
The deal should be closed early in 2016 pending the approval of shareholders at Pep Boys and US federal regulators. Pep Boys-Manny Moe and Jack was the topic in 3 analyst reports since September 7, 2015 according to StockzIntelligence Inc.
The sale price is a 60 percent premium to Pep Boys’ trading value last spring, before takeover speculation raised shares this summer. Pep Boys’ stock has run up 24% year to date through Friday, while the S&P 500 has gained 0.8%.
JP Morgan Securities LLC was the financial adviser to Bridgestone.
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Pep Boys, which began in 1921 in West Philadelphia, has sought buyers several times since 2006, including an announced offer in 2012, and its share price has trailed faster-growing competitors like Autozone. Adirondack Research & Management Inc. is another notably bullish investment manager who is having 411,201 shares of Pep Boys or 1.85% of their USA long equity exposure.
