Activist investor Carl Icahn is wasting no time with his stake in Pep Boys. On Friday, regulatory filings revealed that he had taken a 12.1% stake in the automotive repair company, and now today, another regulatory filing indicates that he has entered a new bid that beats the previous offer from Bridgestone. Mario Gabelli also owns a large stake in PBY.
Pep boys ( PBY)….. Clients we have entrusted to us own 10 mill shares +-
— Mario Gabelli (@MarioGabelli) December 7, 2015
Carl Icahn battles Bridgestone for Pep Boys
Bridgestone made an offer to buy Pep Boys in October for $15 per share, which values it at $835 million and grants a premium of 23% over the company’s unaffected share price. In a press release this morning, PBY said Icahn had been in talks with management for six months but that his highest bid at that time was $13.50 per share. The activist investor said in a filing on Friday that he sees PBY as a potential acquisition target for Auto Plus, a competitor that he currently owns.
Bridgestone owns more than 2,200 automotive repair and tire retail centers around the U.S., and if it does close a deal to acquire Pep Boys, it would make the biggest automotive repair chain in the world. By comparison, Pep Boys owns 560 retail locations and an 800 service.
Icahn’s new bid tops Bridgestone
In a statement today, Bridgestone said it had made progress toward finalizing a deal with Pep Boys and expects it to close early next year, reports the Chicago Tribune. Pep Boys agreed to a $35 million breakup fee in the event of a higher offer being accepted instead.
However, this newest set of regulatory filings includes a letter from Icahn’s firm to Pep Boys’ board of directors in which they offer $15.50 per share, outbidding Bridgestone’s $15 per share offer. The letter reads:
“This proposal is NOT subject to any due diligence, financing or antitrust conditions and we are prepared to enter immediately into the exact same merger agreement that Pep Boys executed with Bridgestone Retail Operations, LLC. In addition, we will enter into any reasonable further agreements that you may require in order to provide greater certainty of closing.”
Icahn and his firm believe their offer is “clearly superior” to Bridgestone’s offer and that their financial wherewithal to close expeditiously is indisputable.” Further, Icahn Enterprises CEO Keith Cozza said they are prepared to meet with Pep Boys immediately to firm up the negotiations and document them.
Pep Boys stock retreats slightly after Latest SEC filing
Shares of PBY shot upward in early trading this morning as a result of Friday’s post-market-closing news that Icahn had taken a sizeable stake in the firm hit the wires. The stock dipped not long after, however, and as of this writing was up 1.85% at $15.99 per share after reaching as high as $16.48 per share earlier today.