Auto parts and repair retail chain Pep Boys announced it is planning to terminate its deal with tire and auto service company Bridgestone Corp. after it received a buyout offer from Ichan Enterprises that values the company at a higher price.
In October, Pep Boys reached a deal to be acquired by Bridgestone for $15 a share, or about $835 million, which represented a 23 percent premium to Pep Boys' closing price of $12.15 on the Friday prior to the agreement, according to CNBC.
However, this came crashing down Monday when Ichan Enterprises executive Keith Cozza sent a letter to Pep Boys saying: "I am writing on behalf of the Board of Directors of Icahn Enterprises L.P. to make a proposal for a negotiated transaction whereby Icahn Enterprises would acquire all of the outstanding shares of common stock of The Pep Boys — Manny, Moe & Jack for $15.50 per share in cash."
"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," he added, according to Philly.com.
The new deal offers 50 cents more per share, valuing the company at about $863 million, thus making the deal "superior" to the previous one, which is a fact Cozza was well aware of.
"We believe our proposal is clearly superior to the $15.00 per share Bridgestone transaction and that our financial wherewithal to close expeditiously is indisputable," noted Cozza, later adding that the proposal isn't subject to antitrust concerns.
In the meantime, Pep Boys said Bridgestone will have until Dec. 11, three days from when the notice was delivered, to make a new offer, reported Reuters. Until then, the board will hold off on making a recommendation on either offer.
Both Pep Boys and Bridgestone have yet to issue an official statement about the recent developments.
