Icahn: Pep Boys Has 'Enormous Growth Potential'
Happy new year to the shareholders of Pep Boys — Manny, Moe & Jack. The acquisition of the Pep Boys company by billionaire investor Carl Icahn has given every shareholder 23% more cash.
Icahn's price of $18.50 per share is 23% higher than the original $15-per-share offered by Bridgestone Retail Operations LLC in October. The Icahn price values Pep Boys at approximately $1.031 billion in aggregate equity value.
On Dec. 30 Pep Boys and Icahn Enterprises LP (of which Icahn is chairman,) made the deal official. Pep Boys canceled its merger agreement with Bridgestone and in one U.S. Securities and Exchange Commission filing said it had paid the tire maker the required $39.5 million termination fee. A later filing on the same day clarified it was Icahn Enterprises that wrote the check.
The boards of directors for both Pep Boys and Icahn Enterprises unanimously approved the merger agreement, the companies said in a press release.
"This was a terrific opportunity to leverage the financial resources and industry knowledge of Icahn Enterprises to the benefit of Pep Boys' customers, manufacturer partners and employees and further bolster our U.S. automotive footprint," Icahn said. "Since our acquisition of Auto Plus, our wholly-owned automotive aftermarket company in June, we have been actively looking for an excellent synergistic acquisition opportunity like Pep Boys, which has enormous growth potential, strong brand recognition, and well-known, best-in-class customer service."
Pep Boys CEO Scott Sider said, "We are very pleased to have reached this agreement, which delivers outstanding value to Pep Boys' shareholders, provides new opportunities for Pep Boys employees and allows Pep Boys to benefit from the significant expertise and resources of Icahn Enterprises.
"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. I am confident in Pep Boys' strong future growth prospects as an Icahn Enterprises portfolio company."
The merger is expected to close in the first quarter of 2016.