Auto service chain Pep Boys reversed course on an agreed $835m merger
New York - AFP
Auto service chain Pep Boys reversed course Wednesday on an agreed $835 million merger with tire maker Bridgestone and said a subsequent takeover offer by Carl Icahn was a better deal.
The service chain, whose formal name is The Pep Boys -- Manny, Moe & Jack, said it had alerted Bridgestone that Wall Street activist Icahn's $15.50 a share offer Monday constituted a "superior proposal" to the $15.00 a share offered by the Japan-based multinational.
The Pep Boys board said it had informed Bridgestone, the world's largest tire maker, that it planned to terminate the deal the two tentatively agreed on October 26.
But the board left open until Friday the possibility for Bridgestone to increase its bid before it officially terminates their agreement in favor of Icahn's offer.
After having surged to $16.30 on Tuesday, Pep Boys shares sagged Wednesday to $16.25.
Bridgestone's deal would add Pep Boys' 800 US locations, offering tire and car maintenance services, to its own 2,200 US outlets.
Icahn, meanwhile, is believed to want to combine the retail sales side of Pep Boys with Auto Plus, the auto parts network of 2,300 outlets that he controls.
Analysts expect he would sell off other parts of the Pep Boys business.