Icahn ups Bid for Pep Boys (PBY) to $18.50 per Share
Shares of Pep Boys (PBY) were trading up +1.13 or +6.49 percent to $18.54 per share in Tuesday’s premarket after news that investor Carl Icahn had sweetened his offer for the company from a previous bid of $16.50 to $18.50 per share. Pep Boys stock closed at $17.41, down -0.10 or -0.57 percent in Monday’s regular trading session.
Pep Boys has been in a bidding war since Bridgestone Retail Operations, LLC (BSRO), a wholly owned subsidiary of Tokyo based Bridgestone Tire entered a $15.00 per share bid or approximately $835 million on the company in late October. Earlier this month, activist investor Carl Icahn countered the Bridgestone offer bidding $16 per share, and subsequently sweetening the offer to $16.50. Bridgestone countered the offer with a $17 per share bid last week, which was accepted by Pep Boys.
The latest bid for $18.50 per share values Pep Boys in excess of $1 billion. The Pep Boys board announced in a news release yesterday that it had determined the Icahn offer was superior to Bridgestone’s and will pay a termination fee to Bridgestone to end their agreement. Bridgestone must meet a deadline of Thursday at 5pm EST to respond to the latest offer before Pep Boys terminates the deal.
Last Thursday, Pep Boys had agreed with Bridgestone on the $17 per share offer, meeting the deadline to beat Icahn’s previous $16.50 share bid. Pep Boys said at the time that it had increased the amount of the breakup fee with Bridgestone from $35 million to $39.5 million. Icahn Enterprises countered by offering to pay $0.10 per share above any Bridgestone offer up to $18.10 per share.
In a securities filing yesterday, Icahn Enterprises LP said that “it could be willing to bid in excess of $18.50 per share,” adding, “However, Icahn Enterprises … does not intend to bid any higher than $18.50 per share if [Pep Boys] agrees to any increase of Bridgestone’s termination fee.”
Pep Boys stock has soared since Bridgestone’s original offer of $15 in October. The stock was previously trading just over $12 per share before the original Bridgestone bid. Since Icahn has entered the bidding war, the company’s valuation has exceeded $1 billion and could rise if Bridgestone counters the latest offer. Pep Boys stock is already trading at a premium of the $18.50 offer and will remain in play through the Thursday deadline.
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