The bidding has ended in the Icahn-Bridgestone battle over Pep Boys as the auto parts chain tapped Icahn Enterprises as its buyer. Icahn Enterprises and Bridgestone, major automotive aftermarket supplier, had been engaged in a battle over ownership of the formerly independent auto parts business for the last several weeks.
Late last week, it looked as though Pep Boys would end up in the Bridgestone sphere of influence as the chain accepted a $17-a-share offer. That situation changed when Icahn Enterprises, owned by financier Carl Icahn, offered $18.50 per share, boosting the ultimate selling price to more than $1 billion. Pep Boys’ informed Bridgestone late yesterday afternoon that it had accepted Icahn’s more lucrative offer. Bridgestone had until Thursday at 5 pm to respond, however, it declined to be dragged further into a bidding war with Icahn. As part of the agreement, Icahn will pay a $39 million termination fee to Bridgestone, Automotive News said today.
Icahn Enterprises plans to combine Pep Boys with another subsidiary, Auto Plus. Icahn acquired Auto Plus earlier this year. According to the automotive industry trade paper, Icahn’s aggressive stance reflects the recognition that the American auto fleet is aging – this year the average age of cars in the United States topped 11 years for the first time – and represents an opportunity.
Icahn said, in a statement today, that the purchase of Pep Boys “was a terrific opportunity to leverage the financial resources and industry knowledge of Icahn Enterprises to the benefit of Pep Boys’ customers, manufacturer partners and employees and further bolster our US automotive footprint. Since our acquisition of Auto Plus in June, we have been actively looking for an excellent synergistic acquisition opportunity like Pep Boys.” He indicated that there were three reasons he sought out Pep Boys. The reasons included:
- Enormous growth potential.
- Strong brand recognition.
- Well-known, best-in-class customer service.
Today’s purchase immediately expands Icahn’s reach into the burgeoning automotive market. Begun in Philadelphia, Penn., Pep Boys has grown to more than 800 stores in 30 states. There is a natural synergy between Icahn’s Federal-Mogul Holdings, where the financier has an 82 percent stake. Among the 22 automotive brands that Federal-Mogul holds are:
- Champion Spark Plugs
- MOOG Steering Parts
- ANCO Wiper Blades
- Wagner Brake Parts
Shares of Pep Boys have risen sharply this year on the strength of the bidding war.