Carl Icahn Offers to Buy Pep Boys for $863 Million
After disclosing that he had purchased a 12-percent stake of the company, billionaire investor Carl Icahn submitted an offer of $863 million for the Pep Boys chain of automotive parts stores, according to the New York Times.
Icahn’s offer Tuesday of $15.50 per share is higher than Bridgestone’s offer of $15 per share in October for the chain of 800 stores. The Japanese tire giant offered to buy the chain to add to its 2,200 stores including Tires Plus, Firestone Complete Auto Care, Hibdon Tires Plus and Wheel Works to make one of the largest parts, tire and service chains in the U.S.
Pep Boys’ deal with Bridgestone included a $35 million breakup fee, according to the Wall Street Journal, which Icahn is willing to pay as part of his offer. Officials at Pep Boys said publicly that Icahn’s offer could be a “superior proposal” to the Bridgestone deal.
On Monday, Pep Boys said in a Securities and Exchange Commission filing that Icahn’s offer may be to “frustrate” Bridgestone from buying Pep Boys, splitting the retailer into parts and offering those parts for sale.
According to Automotive News, Icahn may be offering to purchase the chain to do the exact same thing. Bret Jordan, an analyst at Jefferies LLC, said Icahn could be purchasing Pep Boys to split off parts of its business, such as its tire service centers, to sell to others — including Bridgestone.
“I wouldn’t rule out that he owns it ultimately, but I wouldn’t be surprised if he owned it with the intention of auctioning off the service and tire business,” Jordan told Automotive News.
Icahn owns Auto Plus through his investment company, which is a competitor to Pep Boys. In his disclosure Monday, Icahn said Auto Plus purchasing Pep Boys would be advantageous for the parts supplier.
Icahn previously offered to buy Pep Boys for $13.50 per share before Bridgestone’s offer in October.
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People at PBY have been looking over their shoulders, and keeping their resumes up to date for years. That doesn't mean that it isn't a good place to work. I found it to have some good and some bad points, but its best leadership was really very good. And many a person in IT in the Philly area found a decent home there for a good while. But the nervousness was always there, as the earnings picture, while perhaps not a bloodbath, was for years a real battle.
He'l fire Manny and Moe the first day.