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Icahn Continues Pep Boys Pursuit With Sweetened Bid

Pep Boys (PBY) now prefers a deal with Carl Icahn, after the activist investor sweetened the bid for the auto parts maker for a valuation of about $1 billion.

Pep Boys - Manny Moe & Jack (PBY) has switched its preference to a deal with Carl Icahn, after the activist investor launched a sweetened bid valuing the retailer of auto parts around $1 billion. The Philadelphia-based company said its board notified Bridgestone that it intended to abandon the deal, whose latest price was $17 a share, after receiving a proposed merger agreement Monday signed by Icahn Enterprises LP that included no due diligence or financing conditions on a price of $18.50 a share. Icahn topped his own stated-threshold for a Pep Boys bid: he had previously said he would be willing to offer as much as $18.10 per share. And Icahn may not be done. The latest bid marks an increase of more than 20% from the $15 a share for which Bridgestone originally agreed to buy Pep Boys, but if the tire maker does come back the investor indicated he's willing to offer even more, barring any increase in Bridgestone's $39.5 million termination fee. 'Based on its prior actions, Bridgestone may seek to regain its favored status by merely matching, rather than exceeding the Icahn Enterprises offer,' Efraim Levy, an analyst with S&P Capital IQ, said in a note to clients Tuesday. The bidding war broke out for Pep Boys when Icahn on Dec. 7 launched a hostile $837 million bid for the retailer, just a few days after disclosing a 12.1% stake in the company. Icahn had hinted that a bid was coming, indicating in a filing with the Securities and Exchange Commission that Pep Boys' auto parts segments would fit well with Icahn Enterprises-owned auto parts business Auto Plus.