Pep Boys has confirmed that, on Dec. 4, the company received notice that Carl C. Icahn and affiliated entities (Icahn) filed a Schedule 13D, disclosing its beneficial ownership of approximately 12 percent of Pep Boys’ Common Stock. The Schedule 13D also disclosed that Icahn had engaged in prior discussions with the company regarding Icahn’s interest in Pep Boys and, in particular, its retail business.
As previously announced on Oct. 26, following a thorough review of strategic alternatives to enhance shareholder value that included discussions with a number of interested parties, Pep Boys and Bridgestone Retail Operations LLC, a wholly owned subsidiary of Bridgestone Americas Inc., entered into a definitive merger agreement under which Bridgestone will acquire Pep Boys in an all-cash transaction for $15 per share.
According to the Schedule 14D-9, the form discloses that such discussions took place over six months and did not result in Icahn’s presentation to the company of a transaction with a value superior to Bridgestone’s $15 per share offer. Notably, on Oct. 22, Icahn declined to increase its previously delivered $13.50 per share proposal for the company and, since that date, Icahn has not presented the company with any subsequent proposal.
On Dec. 4, Icahn also made a Hart-Scott-Rodino anti-trust filing in order to further preserve its flexibility. The notice disclosed Icahn’s “good faith intention,” dependent upon various factors including market conditions, to acquire in excess of a majority of Pep Boys’ outstanding voting securities. However, the Schedule 13D filed by Icahn reserved its right to propose a variety of other transactions involving Pep Boys in order to achieve its stated interest in acquiring Pep Boys’ retail business.
According to a statement from Pep Boys, these notices have raised concerns that Icahn may be taking these actions to obtain negotiating leverage in its discussions with third parties regarding Icahn’s potential purchase of Pep Boys’ retail business and, as a result, Pep Boys shareholders’ ability to realize the value presented by the Bridgestone offer “may be frustrated,” the company said.
According to a report from the Wall Street Journal, Icahn said Pep Boys’ auto parts segment presents an “excellent synergistic acquisition opportunity,” for his company Auto Plus.
With 6.6 million shares, Icahn Enterprises would be the second-largest shareholder of Pep Boys. AMN’s sister publication, Tire Review, reached out to Bridgestone about Icahn’s recent announcement and received the following statement:
“We at Bridgestone Americas are excited about the swift and certain progress made toward finalizing our company’s acquisition of Pep Boys in early 2016. We’ve quickly received all required regulatory approvals, including those related to anti-trust, and are now in the advantageous position of completing the tender offer and acquisition in approximately 30 days,” a spokesperson said. “We are unable to comment further.”
