Pep Boys agrees to be bought by Icahn for $1 billion after bidding war with Bridgestone

NEW YORK, N.Y. – Carl Icahn is acquiring Pep Boys for $1 billion, ending his weekslong bidding war with the Japanese tire company Bridgestone.

The deal announced Wednesday is expected to close in the first quarter of next year.

Icahn Enterprises offered $18.50 in cash for each share of Pep Boys, $1.50 more per share than the most-recent offer from Bridgestone. With the contest becoming too rich, Bridgestone bowed out Tuesday.

Because Pep Boys had already agreed to a deal with Bridgestone Corp., Icahn Enterprises will pay it a $39.5 million breakup fee.

Philadelphia-based Pep Boys – Manny, Moe & Jack operates more than 800 locations around the country that sell auto parts, fixes vehicles and offer other services. The company’s tire business has been under pressure and it has looked for new ways to generate cash.

Icahn said in a statement that Pep Boys has “enormous growth potential.” The activist investor said he has been looking for a company to pair with Auto Plus, an auto parts distributer that Icahn Enterprises bought earlier this year.

With the end of the bidding war, shares of Pep Boys fell 55 cents, or 3 per cent, to close Wednesday at $18.39. Icahn Enterprises LP rose 60 cents, or 1 per cent, to $62.12.