NEW YORK (Bloomberg) -- Billionaire investor Carl Icahn raised his offer for Pep Boys to $18.50 a share in cash, or more than $1 billion, escalating a bidding war with Bridgestone Corp. for the car-parts chain.
In announcing the proposal on Monday, Icahn Enterprises said it would be willing to pay an even higher price, so long as Pep Boys doesn’t increase the termination fee in its deal with Bridgestone. The automotive retailer agreed to a sweetened, $17-a-share takeover offer from Bridgestone last week, following an earlier bid from Icahn.
Pep Boys later Monday said its board determined Icahn's offer to be a superior proposal and that it has moved to terminate its previous agreement with Bridgestone. The tire company now has until 5 p.m. ET on Thursday to respond.
"Any further decisions will be made based on what continues to make business and financial sense for Bridgestone and aligns with our long-term growth strategy," Bridgestone said in a statement today. "We are unable to comment further."
Icahn's offer is not subject to any due diligence, financing or antitrust conditions.
The takeover battle for Pep Boys underscores the confidence Icahn and Bridgestone have in the U.S. auto-parts retailing industry, which has benefited from an aging vehicle fleet on American roads.
Both Bridgestone and Icahn are seeking to expand their presence in the tire and automotive-repair sector by adding Pep Boys’ 800 locations across more than 30 states. Bridgestone operates more than 2,200 tire and automotive centers in the country. Icahn, meanwhile, plans to combine Pep Boys with the Auto Plus chain, which he acquired earlier this year.
Icahn also holds a dominant 82 percent stake in Federal-Mogul Holdings Corp., which owns about 20 major aftermarket auto parts brands such as Champion Spark Plugs, MOOG steering parts, ANCO wiper blades and Wagner brake parts. It's not yet clear how Icahn would position the supplier to benefit from his further expansion into parts retailing.
The longtime Wall Street activist's increased offer sent Pep Boys’ stock up 9 percent to close at $18.94 today. Shares of the Philadelphia-based company, whose full name is Pep Boys -- Manny, Moe & Jack, had already gained 77 percent this year, largely driven by the bidding war.
Icahn had previously said he was willing to pay at least $18.10 a share and was puzzled by Pep Boys’ board opting for the Bridgestone offer.
“We cannot understand the actions of the directors in that they know we were willing to offer a lot more than $17,” he said last week.
Reuters and Automotive News contributed to this report.
