The acquisition of The Pep Boys — Manny, Moe & Jack by Bridgestone Americas Inc. is underway, and it turns out the tire maker has had its eye on Pep Boys and considered it an acquisition target for “the past several years.”
Now the deal is in process. On Nov. 16 Bridgestone says, TAJ Acquisition Co., a wholly-owned subsidiary of Bridgestone Retail Operations LLC (BSRO), is commencing its previously announced cash tender offer to buy all outstanding Pep Boys shares. Upon successful closing of the tender offer, shareholders of Pep Boys will receive $15 in cash for each share of Pep Boys common stock, without interest and less any applicable withholding tax. The tender offer will expire at 5 p.m. Eastern Time on Jan. 4, 2016.
Paperwork filed with the U.S. Securities and Exchange Commission gives a bit of the back story:
Bridgestone says management considered a potential deal under former BSRO President Larry McGee in early 2013 “but ultimately decided not to pursue an acquisition.” When Stuart Crum was appointed BSRO president in July 2013, the possibility was considered once again.
“In 2014 Bridgestone management conducted another analysis of the potential opportunity to acquire Pep Boys and this time decided to move forward."
But that 2014 analysis was focused on a test run. Bridgestone wanted to acquire “a select few locations” and then partner with a major auto parts retailer to operate the retail segment in each of the selected locations. “Bridgestone then initiated discussions with a few major retail partners about purchasing five to 10 locations from Pep Boys.”
On Feb. 6, 2015, a Bridgestone representative contacted a Pep Boys representative to express formal interest in the test run. Bridgestone wanted to acquire stores in various markets, including El Paso, Texas; Minneapolis, Minn.; and Oklahoma City, Okla. The two companies kept up those talks through May, but the discussion never progressed beyond the preliminary stage.
Then, on May 19, 2015, The Wall Street Journal reported that a number of parties were interested in buying Pep Boys.
By July, Bridgestone submitted a preliminary, non-binding letter of interest and an offer of $12-$15 per share. In August Bridgestone representatives attended a management presentation with Pep Boys senior executives in Philadelphia, Pa., On Sept. 3, 2015, Bridgestone upped its offer to $15 per share, and the merger agreement was announced Oct. 26, 2015.
