Dive Brief:
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Activist investor Carl Icahn Friday disclosed he had acquired one-eighth of Pep Boys' stock and that he wants the company to sell its retail stores to his own Auto Plus chain.
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Pep Boys said last Monday in its Securities and Exchange Commission filing that it had rejected an earlier $13.50 a share offer from Icahn in favor of Kurume, Japan-based Bridgestone Corp.’s U.S. subsidiary's $15 offer, or about $835 million.
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Icahn’s investment company Monday said it will beat Kurume, Japan-based Bridgestone Corp.'s $15 per share offer by $0.50 a share. That eliminates the need for a due diligence review. There has been no comment yet from Pep Boys or Bridgestone.
Dive Insight:
It’s not clear whether Icahn is really in for the long haul here or if his move is designed to ignite a bidding war and drive up Bridgestone’s offer.
Icahn has done so before, fighting for — and winning — the PayPal spin-off from eBay and the merger of Family Dollar with a rival. He has also needled Apple several times to buy back stock.
Investor activism like Icahn’s often disrupts the plans and management of retail companies because it can get in the way of thoughtful strategy and corporate governance. That's what led former eBay director Marc Andreessen to compare him to "evil Captain Kirk" last year over his meddling in eBay and PayPal.
But the intervention of activist investors like Icahn in some cases can help unlock value in a retailer or force boards to take needed action. In other cases, the moves are mainly designed for activists to unlock profits only for themselves.
"Icahn buys and sells a lot of companies. I don't think he is going to stay in this business longterm; he's trying to screw Bridgestone into paying more money," Robert Costello, head of $100 million-asset Costello Asset Management, told the Philadelphia Inquirer.
That could make things difficult for Pep Boys, dinging it with high costs just when it needs to be competitive.
