Carl Icahn’s Icahn Enterprises has agreed to buy Pep Boys-Manny Moe & Jack (PBY) 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’ 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, and the company also owns an 82% stake in auto parts maker Federal-Mogul Holdings.
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.
Up to Tuesday’s close, Pep Boys shares had risen about 93% this year, while Icahn Enterprises shares had fallen about 33.5%.
This story has been updated throughout.