Carl Icahn Makes A Bid For Pep Boys

Carl Icahn is back at it again. In a recent SEC filing, Icahn disclosed a 12.2% stake in Pep Boys-Manny Moe & Jack (NYSE:PBY). He’s called for the company to sell its auto parts retail section to his own company, Auto Plus. But now he’s interested in buying all of Pep Boys.

Philadelphia-based Pep Boys’ shares closed at $16.30 in New York, 5.2 percent higher than the $15.50 a share that billionaire investor Carl Icahn offered to buy the company. That bid was 3.3 percent more than the $15-a-share proposal from Bridgestone Corp. that Pep Boys agreed to in October.

Investors are betting that Icahn, Bridgestone or someone else will be willing to pony up for a well-known brand with 800 locations in 35 states. While Pep Boys’ sales growth has slowed and its profitability has become sporadic in recent quarters, the chain offers a quick expansion opportunity for anyone looking to benefit from an aging U.S. car fleet.

Pep Boys added fuel to the speculation Tuesday, when it said that Icahn’s offer probably constitutes a “superior proposal.” While that doesn’t mean Pep Boys is terminating its agreement with Bridgestone or changing its recommendation that investors vote for that bid, it lets the company further consider Icahn’s offer.

Before making his $863 million offer for the whole company, Icahn had been pursuing Pep Boys’ retail business. Icahn had stated earlier that Pep Boys should sell its retail business to Auto Plus, a competitor he owns, saying the combination “presents an excellent synergistic acquisition opportunity.”