Pep Boys Rises After Icahn Takes Stake With Eye Toward Deals

  • Billionaire seeks sale of retail unit to his Auto Plus chain
  • Auto Plus is Icahn-held company consolidating parts suppliers

Pep Boys - Manny Moe & Jack rose the most in more than a month after Carl Icahn disclosed a 12 percent stake in the auto-parts and maintenance chain and said it should sell its retail business to a competitor he controls.

Pep Boys’ retail parts business “presents an excellent synergistic acquisition opportunity for Auto Plus," which is owned by Icahn Enterprises LP, the billionaire activist investor said in a regulatory filing Friday. Representatives for Icahn have had and will continue talks with the company regarding “potential transactions” involving its retail segment, according to the filing.

The move may put Icahn into competition with a unit of Bridgestone Corp., which agreed in October to buy the Pep Boys retail chain for about $835 million to combine with its U.S. network of tire and automotive centers. The tender offer is set to expire on Jan. 4.

Pep Boys rose as much as 5.2 percent to $16.50 in New York, the biggest intraday gain since Oct. 26. The shares already had gained 60 percent this year through Friday, driven by the Bridgestone deal.

Pep Boys on Monday confirmed that it had received notice of Icahn’s investment and said it may threaten shareholders’ ability to benefit from the Bridgestone deal. Pep Boys also identified Icahn as the party that it disclosed in merger documents that had made a $13.50-a-share offer for the company. Icahn on Oct. 22 declined to increase that bid and hasn’t since provided the company with a new proposal, Pep Boys said.

Auto Plus is an aftermarket parts supplier that Icahn acquired this year from Canada’s Uni-Select Inc. for about $340 million, and which he is using to drive consolidation in the industry. The company aims to be one of the largest automotive aftermarket companies in the U.S. in the next five years, according to its website.

Icahn Enterprises is a publicly traded master-limited partnership that holds stakes in the billionaire activist’s investments in industries including autos, energy, metals, rail cars, casinos, food packaging, real estate and home fashion. Icahn, 79, is worth about $21 billion, according to the Bloomberg Billionaires Index, and primarily invests his own fortune, rather than relying on money from outsiders.

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