Investor Carl Icahn sweetens offer for Pep Boys, topping Bridgestone’s bid

Pep Boys shares traded 2.85% lower at $18.40 in afternoon trading, dipping below the share price of Icahn’s winning offer after soaring above the bid in Tuesday trading, apparently in anticipation of a higher bid from Bridgestone. The move comes a day after Bridgestone said it wouldn’t make a counteroffer to Mr. Icahn’s latest bid of $18.50 a share.

According to Icahn Enterprises, it would be willing to bid more than $18.50 per share for Pep Boys unless Pep Boys increased Bridgestone’s termination fee of $39.5 million.

Nashville, Tennessee-based Bridgestone now operates a nationwide network of 2,200 tire and automotive service centers including 43 Firestone Complete Auto Care locations in New Jersey. Bridgestone will decide on its next steps within three business days, spokesman Fusamaro Iijima said on Tuesday.

The merger is expected to close in the first quarter of 2016. The activist investor plans to combine Pep Boys with Auto Plus, a competing automotive aftermarket service company he acquired earlier this year.

The Board of Directors of Pep Boys said the Mr. Icahn’s proposal to acquire the company is superior to its transaction with BSRO. Icahn Enterprises rose 60 USA cents, or 1 percent, to $US62.12. His activity and opinions are closely watched in the investing community, and on Icahn’s favorable comments on Apple Inc.in 2013, the stock went up 5 percent.

“There are tremendous opportunities for Pep Boys and Auto Plus, a company that shares Pep Boys’ unwavering commitment to best-in-class customer service and solutions”.

The fight over Pep Boys is a small part of an unprecedented year in mergers and acquisitions. In addition, on November 16, 2015, Pep Boys filed a Solicitation/Recommendation statement on Schedule 14D-9 with the SEC related to the tender offer. The decision triggered a $50 million payout to Pep Boys.