Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Icahn to buy Pep Boys for $1 billion after Bridgestone bows out

Published 30/12/2015, 16:21
Updated 30/12/2015, 16:21
© Reuters. A Pep Boys auto parts store is shown in Encinitas, California

© Reuters. A Pep Boys auto parts store is shown in Encinitas, California

By Ankit Ajmera

(Reuters) - Carl Icahn's Icahn Enterprises LP (O:IEP) has agreed to buy Pep Boys-Manny Moe & Jack (N:PBY) for about $1 billion, the companies said on Wednesday, hours after Bridgestone Corp (T:5108) quit the race for the U.S. auto parts retailer.

Japanese tire maker Bridgestone said on Tuesday it would not raise its latest cash bid of $17 per share to counter Icahn's raised offer of $18.50 per share in cash.

Pep Boys shares fell 3 percent in late morning trading on Wednesday, while Icahn Enterprises shares declined 2 percent.

Pep Boys' retail auto parts business will be a perfect fit for Auto Plus, an auto spare parts company that Icahn Enterprises bought in June, Carl Icahn said in a statement.

"We think rising and aging (averaging about 11.4 years old according to the U.S. Department of Transportation) vehicle populations and increased miles driven bode well for demand for the automotive replacement parts industry," S&P Capital IQ analyst Efraim Levy wrote in a note.

Icahn Enterprises has been focusing on its auto business, its second largest by revenue, as a slump in crude prices slows growth in its energy business, which accounted for nearly half of its revenue in 2014.

Icahn Enterprises bought Auto Plus from Canada's Uni-Select Inc (TO:UNS) and the company also owns an 82 percent stake in auto parts maker Federal-Mogul Holdings Corp (O:FDML).

Icahn Enterprises, which expects to close the Pep Boys acquisition in the first quarter of 2016, will pay $39.5 million termination fee to Bridgestone.

Pep Boys shares were trading at $18.39 and Icahn Enterprises shares at $60.19.

© Reuters. A Pep Boys auto parts store is shown in Encinitas, California

Up to Tuesday's close, Pep Boys shares had risen about 93 percent this year, while Icahn Enterprises shares had fallen about 33.5 percent.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.