(Reuters) - Carl Icahn’s Icahn Enterprises LP has agreed to buy Pep Boys-Manny Moe & Jack for about $1 billion, the companies said on Wednesday, hours after Bridgestone Corp quit the race for the U.S. auto parts retailer.
Japanese tire maker Bridgestone said on Tuesday it would not raise its latest cash bid of $17 per share to counter Icahn’s raised offer of $18.50 per share in cash.
Pep Boys shares fell 3 percent in late morning trading on Wednesday, while Icahn Enterprises shares declined 2 percent.
Pep Boys’ retail auto parts business will be a perfect fit for Auto Plus, an auto spare parts company that Icahn Enterprises bought in June, Carl Icahn said in a statement.
“We think rising and aging (averaging about 11.4 years old according to the U.S. Department of Transportation) vehicle populations and increased miles driven bode well for demand for the automotive replacement parts industry,” S&P Capital IQ analyst Efraim Levy wrote in a note.
Icahn Enterprises has been focusing on its auto business, its second largest by revenue, as a slump in crude prices slows growth in its energy business, which accounted for nearly half of its revenue in 2014.
Icahn Enterprises bought Auto Plus from Canada’s Uni-Select Inc and the company also owns an 82 percent stake in auto parts maker Federal-Mogul Holdings Corp.
Icahn Enterprises, which expects to close the Pep Boys acquisition in the first quarter of 2016, will pay $39.5 million termination fee to Bridgestone.
Pep Boys shares were trading at $18.39 and Icahn Enterprises shares at $60.19.
Up to Tuesday’s close, Pep Boys shares had risen about 93 percent this year, while Icahn Enterprises shares had fallen about 33.5 percent.
Reporting by Ankit Ajmera in Bengaluru; Editing by Kirti Pandey