Pep Boys says Icahn's buyout proposal could be superior
NY -- U.S. auto-parts retailer Pep Boys-Manny, Moe & Jack stated its board discovered that Carl Icahn's offer to purchase the firm for $15.50 per-share could result in a "superior proposal" compared with Bridgestone Corp.'s present offer.
Bridgestone agreed to to purchase Pep Boys for $1-5 per-share in October.
The board hasn't altered its recommendation regarding the Bridgestone trade, nor can it be making any recommendation regarding the Icahn proposition, the organization said.
While that does not suggest Pep Boys is terminating its arrangement with Bridgestone or altering its advice that traders vote for that bid, it lets the business farther contemplate Icahn's provide.
Because of this, dealers in Pep Boys shares now were wagering the bidding war for the automotive-components chain might be starting.
Philadelphia-based Pep Boys traded at $16.22 as of 10:15 a.m., nicely above Icahn's $15.50 offer.
Investors are betting that Icahn, Bridgestone or some one else will probably be prepared to pony up to get a well known manufacturer with 800 places in 35 states. While Pep Boys' revenue increase has slowed and its particular profitability is now erratic in recent quarters, the chain provides a fast expansion chance for anybody looking to reap the benefits of an aging U.S. automobile fleet.
Before creating his $863 million provide for the entire firm, Icahn was pursuing Pep Boys' re-Tail enterprise. Icahn on Friday stated that Pep Boys should promote its re-Tail company to Car Plus, a competition he possesses, saying the mix "presents an exceptional synergistic acquisition chance."
The activist invest or, who revealed a 12-percent stake in Pep Boys, stated at that time that his reps had and would continue to get discussions with Pep Boys regarding "possible trades" including its retail section.
Icahn may nonetheless only be considering Pep Boys' retail business and aim to market the tire and solutions department to other interested parties like Bridgestone, stated Bret Jordan, an analyst at Jefferies LLC.
"I would not rule out that he possesses it eventually, but I would not be amazed if he possessed it with the purpose of auctioning off the support and tire company," mentioned Jordan, who has a hold recommendation on Pep Boys.
Icahn's bid for the entire business is not susceptible to due-diligence, funding or antitrust states, according to a letter from Icahn Enterprises contained in a filing on Monday. The company offered to enter promptly to the precise merger arrangement that Pep Boys do with Bridgestone, which proposed a offer of about $835 million.
A Pep Boys representative did not instantly react to a voicemail message. Bridgestone declined to comment beyond an emailed statement stating it was trying to to finalize its acquisition of the business.
Bridgestone, the Tokyo-centered tire large, sees Pep Boys as an integral part of its own push deeper into the US, where it already manages more than 2,200 tire and automotive facilities. The merger would produce the world's biggest chain of its own type.
Pep Boys on Monday affirmed that it had acquired notice of Icahn's investing and mentioned it might jeopardize investors' ability to reap the benefits of the Bridgestone offer.
Pep Boys additionally identified Icahn as the celebration that it revealed in amalgamation files that had produced a $13.50-a-share offer for the firm. Icahn on Oct. 2-2 declined to raise that bid and had not since supplied the firm with a new proposition, Pep Boys said.
Auto Plus is an aftermarket components provider that Icahn got this yr from Canada's Uni-Select Inc. for about $340 million, and which he's utilizing to generate consolidation in the sector. The business aims to be among the biggest automotive aftermarket businesses in the US in the next five years, according to its web site.
Icahn's interest in the automotive after-market runs deeper: He additionally holds a dominating 82% stake in Federal-Mogul Holdings Corp., which possesses about 20 leading aftermarket autoparts brands such as Champion Spark Plugs, MOOG directing components, ANCO wiper blades and Wagner brake components.
Federal Mogul in Oct said it posted a net loss of $52 million on sales of $5.6 billion during the first nine months of the year -- down from net earnings of $17 million on sales of $5.5 billion during the same period last year. The after-market company, referred to as the Motorparts office, stated its nine-month operating profits dropped to $152 million from $168 million the year before.
It wasn't immediately clear just how much company Federal Mogul does with Pep Boys and Car Plus.
Icahn Enterprises is a publicly-traded master-limited partnership that retains positions in the billionaire activist's investments in sectors including automobiles, electricity, metals, rail vehicles, casinos, foods packaging, real estate and home trend. Icahn, 79, is worth about $2 1 billion, in line with the Bloomberg Billionaires Index, and mainly invests his own bundle, instead of relying on cash from outsiders.
Bloomberg, Reuters and Philip Nussel of Automotive News contributed to the report.
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