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Bridgestone Launches Tender Offer for US Auto Parts/Service Chain Pep Boys.

M2 EQUITYBITES-November 17, 2015-Bridgestone Launches Tender Offer for US Auto Parts/Service Chain Pep Boys


17 November 2015 - Japanese tyre maker Bridgestone's US-based Bridgestone Retail Operations, LLC unit has a cash tender offer to purchase all outstanding shares of US-based auto parts retail chain The Pep Boys Manny, Moe and Jack (NYSE: PBY), the company said.

Bridgestone will pay USD 15.00 per share, or approximately USD 835m in aggregate equity value.

This represents a premium of 23% over Pep Boys' closing price of USD 12.15 on October 23, 2015 and a premium of 62% over Pep Boys' unaffected (prior to market speculation of a potential transaction) price of USD 9.25 on May 19, 2015.

The transaction is structured as a tender offer.

Pep Boys, headquartered in Philadelphia, is an automotive aftermarket chain that started in 1921. With more than 7,500 service bays in more than 800 locations in 35 states and Puerto Rico, Pep Boys offers tires, maintenance and repair and parts and accessories.

The acquisition accelerates the global growth strategy of Bridgestone Corp., the world's largest tire and rubber company and parent of Bridgestone Americas.

Pep Boys will add approximately 800 locations to BSRO's nationwide network of 2,200 tire and automotive service centers, which operate under the Firestone Complete Auto Care, Tires Plus, Hibdon Tires Plus and Wheel Works brand banners.

Along with these company-owned stores and Bridgestone's more than 5,000 long-standing dealers and distributors in the United States, Pep Boys' distribution network will help reach even more consumers with the products and services they want when they need them.

The acquisition represents an immediate nationwide expansion of more than 35 % for BSRO. The transaction is expected to close in the beginning of 2016.

Under the terms of the agreement, which has been unanimously approved by the boards of both Bridgestone and Pep Boys, a wholly owned subsidiary of BSRO will commence a tender offer for all outstanding shares of Pep Boys at USD 15.00 per share in cash.

The completion of the tender offer will be conditioned on Pep Boys' shareholders tendering at least a majority of Pep Boys' outstanding shares, determined on a fully diluted basis, and other customary closing conditions, including expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act.

Following completion of the transaction, Pep Boys will be wholly owned by and operate under BSRO. Pep Boys' stock will no longer trade on the New York Stock Exchange.

Bridgestone Retail Operations, LLC is headquartered in Bloomingdale, Ill., and owns and operates more than 2,200 tire and automotive service centers across the United States, including Firestone Complete Auto Care, Tires Plus, Hibdon Tires Plus and Wheel Works store locations.

Credit First National Association and Firestone Complete Fleet Care operations are also part of BSRO. BSRO is a member of the Bridgestone Americas family of companies.

J.P. Morgan Securities LLC is acting as the exclusive financial advisor to Bridgestone. Jones Day is acting as legal advisor to Bridgestone. Rothschild is acting as the exclusive financial advisor to Pep Boys. Morgan, Lewis and Bockius LLP is acting as legal advisor to Pep Boys.

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Publication:M2 EquityBites (EQB)
Date:Nov 17, 2015
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