CHICAGO (Bloomberg) -- Billionaire investor Carl Icahn sweetened his offer to acquire Pep Boys with a promise to top any bid from Bridgestone Corp. up to about $1.01 billion.
Icahn’s new offer includes a provision that would automatically beat any Bridgestone bid by 10 cents a share, up to a maximum of $18.10 a share, Philadelphia-based Pep Boys said today in a statement. Pep Boys’ board has determined that Icahn’s offer is superior, giving Bridgestone until 5 p.m. Thursday to respond with a new proposal.
The proposal will test whether Tokyo-based Bridgestone is willing to boost its offer beyond that threshold in order to expand deeper into the U.S. and create the world’s largest chain of tire and automotive centers.
Bridgestone, in a statement today, said the company has "significant concerns relating to the circumstances surrounding the submission of the revised offer and Pep Boys’ review and consideration of that offer.
"We are currently evaluating our options in light of recent developments and, as has always been the case, further decisions will be based on what continues to make business and financial sense for Bridgestone. We will make no further comment."
Icahn's plan
Icahn is looking to add Pep Boys’ 800 locations to the Auto Plus chain that he acquired earlier this year.
Icahn also holds a dominant 82 percent stake in Federal-Mogul Holdings Corp., which owns about 20 major aftermarket auto parts brands such as Champion Spark Plugs, MOOG steering parts, ANCO wiper blades and Wagner brake parts. It's not yet clear how Icahn would position the supplier to benefit from his further expansion into parts retailing.
Traders in Pep Boys’ stock had been anticipating an offer higher than Icahn’s most recent bid of $16.50 a share, or about $918.7 million. Shares of the company, whose full name is Pep Boys -- Manny, Moe & Jack, closed at $16.89 on Tuesday in New York.
Pep Boys shares gained 3 percent to close at $17.40 today.
Pep Boys has about 7,500 service bays in addition to its retail business. Analysts have speculated Icahn still may be interested only in Pep Boys’ retail operation and would plan to sell the tire and services division to other interested parties such as Bridgestone.
Tire Business and Automotive News contributed to this report.
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