Billionaire investor Carl Icahn has raised his offer for the Pep Boys automotive aftermarket chain in the US. The move caused the chain to terminate its agreement to be acquired by Bridgestone.

Icahn offered to acquire Pep Boys for US$16.50 a share in cash, or US$919m on a fully diluted basis according to a filing with the Securities and Exchange Commission.

The bid surpassed Bridgestone's previous proposal to acquire Pep Boys for US$15.50 a share in cash. Mr. Icahn's offer added $56 million in value to the transaction and was seen as superior by Pep Boys' board.

Bridgestone was seeking to add Pep Boys' 7,500 service bays in 800 locations to its 2,200 tyre and automotive centres.

Shares of Pep Boys jumped following the news.

Show the press release

Pep Boys Board of Directors Determines Latest Proposal From Icahn Enterprises Is Superior To Bridgestone Transaction

PHILADELPHIA, Dec. 21, 2015 /PRNewswire/ -- The Pep Boys - Manny, Moe & Jack (NYSE: PBY), the nation's leading automotive aftermarket service and retail chain, today announced that, on December 20, 2015, its Board of Directors, after consultation with its independent legal and financial advisors, determined that a proposal, received on the evening of December 18, 2015, from Icahn Enterprises L.P. to acquire Pep Boys for $16.50 per share in cash, constitutes a "Superior Proposal" as defined in the Company's agreement and plan of merger with Bridgestone Retail Operations, LLC.

As part of its proposal, Icahn delivered to the Company a merger agreement signed by Icahn that is not subject to due diligence or financing conditions and contains a "hell or high water" anti-trust covenant.

Also on December 20, 2015, the Company delivered notice to Bridgestone of the Pep Boys Board's determination and intention to effect a change of recommendation and to terminate the Bridgestone agreement.  Such notice commenced a three business day period that will expire at 5:00pm New York City time on Wednesday, December 23, 2015, during which the Company may not change the recommendation nor terminate the Bridgestone agreement, and Bridgestone has the right to make proposals to the Company.

As previously announced on October 26, 2015, the Company entered into the Bridgestone agreement pursuant to which Bridgestone commenced, on November 16, 2015, a tender offer for all outstanding shares of Pep Boys at $15.00 per share in cash.  On December 11, 2015, the parties announced that the price per share had been increased to $15.50.

There can be no assurance that a transaction with Icahn will result or that Bridgestone will propose any adjustments to the Bridgestone agreement.  The Pep Boys Board has not changed its recommendation with respect to the Bridgestone transaction, nor has it made any recommendation with respect to the Icahn proposal.

Rothschild is acting as the exclusive financial advisor to Pep Boys and Morgan, Lewis & Bockius LLP is acting as legal advisor.

Original source: Pep Boys