Activist Investor Carl Icahn Increases Bid for Pep Boys, Determined to Beat Bridgestone
Billionaire investor Carl Icahn is determined to prove that he is serious in his intention to edge Bridgestone in the bidding war for Pep Boys -- Manny, Moe & Jack.
Pep Boys announced on Monday that their Board of Directors consulted with their legal and financial advisor about the recent bid from Icahn, who tendered an offer worth $18.5 per share in cash, which values the company at around $1 billion.
After the consultation, the company concluded that Icahn had the "super proposal." According to the statement, Pep Boys and Bridgestone struck an agreement on Christmas Eve, wherein the Japan-based company agreed to pay $17.00 per share in cash, which values the company around $947.
The last offer from Bridgestone was just a part of the series of back-and-forth bidding between the companies. In October, the two companies reportedly agreed to $15.00 per share, but Pep Boys received another bid, which forced Bridgestone to sweeten the deal to $15.50 per share.
On Christmas Eve, the two parties also announced that the price increased to $17.00 to the dismay of Icahn, who said that he does not understand why Pep Boys agreed to such amount. Icahn pointed out that Pep Boys is still undervalued at $17.00 per share and hinted that he is willing to pay more.
"We cannot understand the actions of the directors in that they know we were willing to offer a lot more than $17," Icahn told reporters via Washington Post.
Pep Boys also announced that they have already informed Bridgestone about Icahn's later offer on Monday. Bridgestone has until Thursday, 5 p.m. ET to decide whether or not to submit a new proposal to the company. Pep Boys clarified, though, that there is no assurance Bridgestone will tender an improved offer.
"There can be no assurance that a transaction with Icahn Enterprises will result or that Bridgestone will propose any adjustments to the Bridgestone agreement," Pep Boys said in a statement. "The Pep Boys Board has not changed its recommendation with respect to the Bridgestone transaction, nor has it made any recommendation."
The bidding war for Pep Boys started in June, when the company announced that they are considering selling itself after making a strategic review.
Both Bridgestone and Icahn made proposals in the hope of utilizing the assets of Pep Boys, which has 800 locations in more than 30 states in the United States. Bridgestone are planning to expand their tire and automotive centers in the country, while Icahn sees Pep Boys as a huge boost to his Auto Plus chain.
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