The Pep Boys – Manny, Moe & Jack announced today that its board of directors, after consultation with its independent legal and financial advisors, has determined that the proposal from Icahn Enterprises L.P. to acquire Pep Boys for $15.50 per share in cash (as set forth in the company's filing with the Securities and Exchange Commission, dated December 7, 2015) would reasonably be expected to result in a "superior proposal" as defined in the company's agreement and plan of merger with Bridgestone Retail Operations, LLC.
This determination by the board allows the company to further consider the Icahn proposal. In and of itself, however, this does not allow the company to terminate the Bridgestone agreement, nor enter into a definitive transaction with Icahn, both of which can also only occur in accordance with the procedures set forth in the Bridgestone agreement.
The Pep Boys board said it has not changed its recommendation with respect to the Bridgestone transaction, nor is it making any recommendation with respect to the Icahn proposal.
There can be no assurance that the board will ultimately determine that the Icahn proposal is a superior proposal, that the terms of a transaction with Icahn will be the same as those reflected in its proposal or that any transaction with Icahn will be agreed to or consummated.
As previously announced on October 26, 2015, the company entered into the Bridgestone agreement on November 16, 2015, a tender offer for all outstanding shares of Pep Boys at $15 per share in cash. The closing of the Bridgestone tender offer is subject to Pep Boys' shareholders tendering at least a majority of the company's outstanding shares, determined on a fully diluted basis, and other customary closing conditions.
According to an article in the Wall Street Journal, Icahn’s firm initially offered $11.50 per share in late June and then at least $13.50 in late September. In July, Bridgestone offered $12 to $15 a share, and raised its offer in September to $15 per share.
At a price of $15 per share, the valuation is about $835 million. Icahn’s offer of $15.50 per share values Pep Boys at $863 million, according to the Wall Street Journal.
Following completion of the tender offer, both companies will, subject to the satisfaction of certain customary closing conditions, complete a merger in which Pep Boys shares that were not tendered in the tender offer will be cancelled and converted into the right to receive $15 per share in cash.
Rothschild is acting as the exclusive financial advisor to Pep Boys and Morgan, Lewis & Bockius LLP is acting as legal advisor.
Subscribe to Aftermarket Business World and receive articles like this every month….absolutely free. Click here.
