Wall Street activist investor Carl Icahn won a bidding war Wednesday for US auto service chain Pep Boys with an all-cash $1 billion deal after Japanese tire giant Bridgestone pulled out.
Icahn, who is expected to split the company and merge its retail side with his Auto Plus car parts network, offered $18.50 a share, or $1.03 billion, on Monday to buy Pep Boys, topping Bridgestone's sweetened December 24 proposal of $17 a share.
On Tuesday, the world's largest tire maker said it would not counter the bid from Icahn Enterprises, abandoning its drive to hold onto its merger deal agreed with Pep Boys in October.
"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 US automotive footprint," said Icahn, chairman of Icahn Enterprises, in a statement.
"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."
The company, whose formal name is The Pep Boys -- Manny, Moe & Jack -- has more than 800 automotive service and parts outlets in 35 US states and Puerto Rico.
Bridgestone first sealed a takeover deal with the Philadelphia-based Pep Boys in October at just $15 a share, seeking to bolster its own 2,200 tire outlets across the US.
Icahn Enterprises said it would pay Pep Boys' breakup fee of $39.5 million to Bridgestone.
The merger agreement was unanimously approved by the boards of directors at Pep Boys and Icahn Enterprises. The transaction is expected to be completed in the first quarter of 2016.
Shares in Pep Boys tumbled almost three percent to $18.38 in late-morning trade.