Icahn Retakes Lead in Pep Boys Battle With $918.7 Million Offer

20 Jan 2016 | Author: | No comments yet »

CompaniesCarl Icahn steps up fight for Pep Boys.

Pep Boys also said Monday that its Board of Directors had deemed the offer by Icahn a “superior proposal” and gave Bridgestone until Wednesday at 5 p.m. The activist investor, who is best known for rattling the cages of companies’ boards, has increased his offer for Pep Boys, a US chain of car mechanics.The bidding war for The Pep Boys – Manny, Moe & Jack has entered a new round, with Icahn Enterprises L.P. offering an extra dollar per share to acquire the US automotive aftermarket retail and service network – a total of around US$56 million more than the offer it made earlier this month. As part of its proposal, Icahn delivered to the Company a merger agreement signed by Icahn that is not subject to due diligence or financing conditions and contains a “hell or high water” anti-trust covenant. In a statement, Bridgestone acknowledged the competing offer, but said it continues to believe its deal with Pep Boys is good for the combined businesses.

In December, Icahn Enterprises, which was involved in the bidding process earlier this year, unexpectedly made a new offer after the Bridgestone deal was announced of $15.50 per share, or about $863 million. Although acknowledging that Mr Icahn’s proposal is superior, Pep Boys said its board is yet to change its recommendation of Bridgestone’s offer but will do so by the end of Wednesday if the Japanese company hasn’t sweetened its proposal. As previously announced on October 26, 2015, the Company entered into the Bridgestone agreement pursuant to which Bridgestone commenced, on November 16, 2015, a tender offer for all outstanding shares of Pep Boys at $15.00 per share in cash. It wanted the board to meet and determine that it’s offer is “superior” to the existing Bridgestone offer before midnight on Dec. 20 — and the board complied. It also wants Pep Boys to give Bridgestone notice of the offer, and tell the tire maker it plans to terminate the merger agreement with Bridgestone and enter into an agreement with Icahn by 5 p.m.

With over 7,500 service bays in over 800 locations in 35 states and Puerto Rico, Pep Boys offers name-brand tires; automotive maintenance and repair; parts and expert advice for the Do-It-Yourselfer; commercial auto parts delivery; and fleet maintenance and repair. 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 like Bridgestone. Words such as “believe,” ‘intend,” “demonstrate,” “expect,” “estimate,” “anticipate,” “should” and “likely” and similar expressions identify forward-looking statements.

Such forward-looking statements are based on current expectations that involve a number of known and unknown risks, uncertainties and other factors which may cause actual events to be materially different from those expressed or implied by such forward-looking statements. Securities and Exchange Commission (“SEC”), including its Annual Report on Form 10-K for the fiscal year ended January 31, 2015, and subsequent reports filed by Pep Boys with the SEC. Prior to making any decision regarding the tender offer, Pep Boys shareholders are strongly advised to read the Schedule TO (including the Offer to Purchase, a related Letter of Transmittal and other offer materials) and the related Solicitation/Recommendation statement on Schedule 14D-9.

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