Billionaire investor Carl Icahn has done one better than Japanese tire manufacturer Bridgestone, as he has offered to buy auto parts company Pep Boys – Manny, Moe & Jack for about $837 million, beating out Bridgestone’s bid of $810 million.
Icahn Enterprises’ offer of $15.50 per Pep Boys share in cash also edged out Bridgestone’s $15 per share in cash offer, as the company reported a 12.12 percent stake in the popular retailer. In addition, Icahn himself said in a statement that Pep Boys’ automotive parts retail business would be just right for Auto Plus, a competing company he happens to control.
“We are prepared to enter immediately into the exact same merger agreement that Pep Boys executed with Bridgestone Retail Operations LLC. In addition, we will enter into any reasonable further agreements that you may require in order to provide greater certainty of closing,” said Icahn Enterprises CEO Keith Cozza in a letter to Pep Boys management. “We believe our proposal is clearly superior to the $15.00 per share Bridgestone transaction and that our financial wherewithal to close expeditiously is indisputable. We are prepared to meet with you immediately to negotiate and document this transaction.” Neither Pep Boys nor Bridgestone were available for comment when pressed by media.
Interestingly, Pep Boys stock had cooled down, not long after it had traded above Icahn’s price; this is mainly because investors are wondering if there may be any further bids. “(Carl) Icahn buys and sells a lot of companies,” opined Robert Costello of Costello Asset Management in a Philly.com report. I don’t think he is going to stay in this business long-term; he’s trying to screw Bridgestone into paying more money.”
Earlier negotiations with Icahn had Pep Boys suspecting that the activist-investor may be “taking these actions to obtain negotiating leverage,” while also trying to stymie Bridgestone and its ability to resell the auto parts company’s assets at a higher price. Among other companies he controls, Icahn is a majority owner of firms like Apple, PayPal, and X-ray manufacturer Hologic.