Pep Boys – Manny,Moe, & Jack (NYSE: PBY)
Pep Boys News
Chances are if you own a used vehicle or have owned your vehicle for a lengthy period of time you have either passed or you have frequented a Pep Boys location for some sort of service on your vehicle. Services that they offer are vast and varied and extremely helpful to the average person who cannot do the repairs or maintenance on their own. Simple oil changes, tire changes, inspections, as well as engine rebuilds and regular maintenance are the norm at any and all of these locations.
On Monday December 28, 2015, after the market closed for trading in the regular session, Carl Icahn sweetened an already sweet buyout offer for Pep Boys -Manny Moe & Jack that had already been planned for a buyout by Bridgestone Corporation at $17 per share. This trumps a lower bid from Icahn recently at $16.50 per share as recent as last week.
In the regular trading session on Monday, shares were basically unchanged- closing down by $0.10 per share at $17.41. However after Icahn’s revised buyout offer shares quickly jumped up by 6.26% or up $1.09 to close at $18.50 in the after market trading session.
Icahn Group Statements
In its latest offer, Icahn’s group said the increase in the break-up fee is “contrary to the best interest of [Pep Boys] shareholders” because “it would prevent a truly robust auction.” That agreement between Bridgestone and Pep Boys increased the break-up fee for Bridgestone if the deal isn’t consummated — from $35 million to $39.5 million.
Additionally, Icahn’s group said in its new proposal that “it could be willing to bid in excess of $18.50 per share,” according to the filing. “However, Icahn Enterprises … does not intend to bid any higher than $18.50 per share if [Pep Boys] agrees to any increase of Bridgestone’s termination fee.”-Nashville Business Journal
In the daily price chart please see three key areas. The first area of note is the rectangle on the lower left corner section – this is where rumors began circulating that Pep Boys may be a takeout target. Subsequent to that, the company came out with a statement that they were searching for viable options to further enhance shareholder value. Next please note the two circled areas in the upper right with green arrows – this shows the areas on the price chart where buyout offers were subsequently made. Should Bridgestone counter offer this most recent offer by Carl Icahn, it seems like Icahn is well prepared and determined to do battle and increase his offer as well. Time will tell on this one.
The Pep Boys Manny, Moe & Jack, together with its subsidiaries, engages in the automotive aftermarket service and retail business in the United States and Puerto Rico. The companys service locations offer a range of automotive maintenance and repair services; and install tires, parts, and accessories. It provides tires; batteries; new and remanufactured parts for vehicles; chemicals and maintenance items; fashion, electronic, and performance accessories; and non-automotive merchandise. The company also sells various products under private label names, including tires under the names DEFINITY, FUTURA, and CORNELL; batteries under the name PROSTART; wheel covers under the name FUTURA; and air filters, anti-freeze, chemicals, cv axles, hub assemblies, lubricants, oil, oil filters, oil treatments, transmission fluids, custom wheels, and wiper blades under the PROLINE brand. In addition, it offers alternators, battery booster packs, alkaline type batteries, and starters under the name PROSTART; power steering hoses, chassis parts, and power steering pumps under the PROSTEER name; brakes under the name PROSTOP; and brakes, batteries, starters, ignitions and chassis under the VALUEGRADE name. As of January 31, 2015, the company operated 563 Supercenters, 237 Service and Tire Centers, and 6 Pep Express stores; and 7,524 service bays. The Pep Boys Manny, Moe & Jack was founded in 1921 and is headquartered in Philadelphia, Pennsylvania.- YahooFinance