PepBoys – Manny Moe & Jack (NYSE: PBY)
After the market closed yesterday, billionaire investor Carl Icahn stated that he would raise his bid for PepBoys (PBY) to $18.50 per share, valuing the company at just over a billion dollars, topping Bridgestone Corp.’s offer of $17 per share. This was after PBY rejected Icahn’s original bid of $16.50 last Thursday as the two bidders have been going back and forth in an incredible bidding war. This is a great position for PBY and is creating excellent value for its investors so we’ll have to see how Bridgestone rebuttals but they’ll have to act quickly as they only have until today at 5pm EST today to respond.
“Based on its prior actions, Bridgestone may seek to regain its favored status by merely matching, rather than exceeding the Icahn Enterprises offer,” Efraim Levy, an analyst with S&P Capital IQ, said in a note to clients Tuesday. (TheStreet)
Looking at the daily chart you can see that PBY has been performing quite well as it is being fueled by the bidding war going on with Icahn and the Japanese tire maker Bridgestone Corp. Shares started the year off at $9.86 and as of yesterdays close at 17.51, PBY is up an incredible 78%. Today PBY opened up at $18.60 after the new Icahn bid came in and reached highs of $18.93 before settling down and maintaining a price around $18.79 throughout the day. The hard part about trading buyout/merger deals is that the price is built into the stock almost instantly and will generally hover around that price which makes it hard to day trade. We should see some support at the $17.50 level with resistance at the $19 and $20 price ranges. We can expect the shares to stay around the $18.50 price level until a new bid is released or the deal falls through. PBY has a 46.2 million-share float with an average daily volume of 1.4 million shares. Currently, analysts have an average price target of $16.50 but as long as the bidding war continues we could see this price continue to go north. Keep an eye on this one, as there may be some added value once a deal is reached and we know who is buying the company.
The Pep Boys-Manny Moe & Jack is a car sales and services provider company. It provides automotive tires, parts, accessories and services. The company’s stores are organized into a hub and spoke network consisting of supercenters and service & tire centers. It has eight operating segments defined by geographic regions and each segment serves both in combine do-it-for-me service labor, installed merchandise and tire offerings with do-it-yourself parts and accessories lines of business. The company competes primarily with the two types of businesses in each segment of the automotive aftermarket include Retail and Service. The Pep Boys-Manny Moe & Jack was founded by Emanuel Rosenfeld, Maurice Strauss, Moe Radavitz and W. Graham Jackson in 1921 and is headquartered in Philadelphia, PA. (MarketWatch)