It was reported today that Pep Boys had agreed to a $947 million takeover offer from Bridgestone Group, shunning a competing bid from billionaire investor Carl Icahn that had promised a higher price. Pep Boys in a statement said that its board no longer considered Icahn’s most recent offer which included a vow to beat any bid up to $1.01 billion. The agreement is a clear indication that Pep Boys is willing to accept a lower price to complete a tie-up with Tokyo based Bridgestone Group, one it had originally accepted in October before the bidding war between Icahn and Bridgestone began. Carl Icahn in a statement said that he still believed that the company was way undervalued but was happy that he was able to materially enhance shareholder value.
Many analysts on the street believe that the takeover battle for Pep Boys is a clear indication about the confidence both Pep Boys and Bridgestone have in the US auto-parts retailing industry. Many believe that both Icahn and Bridgestone were seeking to expand their presence in the tire and automotive repair sector by adding Pep Boys’ 800 locations across the United States. Icahn planned to combine Pep Boys with the Auto Plus chain that he had acquired earlier this year.
When looking at the charts for Pep Boys, the stock has been in a strong uptrend. The stock has been forming higher highs and higher lows indicative of the strong buying interest. The stock currently trades above all important daily moving averages which is a bullish sign. The relative strength index for the stock continues to trade in the overbought zone but shows no signs of a reversal. The momentum indicators for the stock have given a fresh buy signal indicative of the strong buying momentum. Traders believe the stock could head to $15.75