Japanese tire maker Bridgestone Corp has recently announced its intention to purchase auto parts retailer Pep Boys-Manny, Moe & Jack for $835 million in order to expand its presence in the United States, the second largest auto market in the world.
According to the Japanese company, the acquisition will lift its retail network span by at least on third in the country, which already has the Bridgestone Retail Operations (BSRO) division operating a chain of auto care and tire stores in the US. “Bridgestone is looking to expand its market share in services and tires … it’s a little harder to understand what they might do with (Pep Boys’) retail operations but they’ll come up with a plan for it,” comments Jefferies analyst Bret Jordan, who also didn’t see any rival strategic buyer placing a competing bid on the company’s stock. According to Reuters figures, Bridgestone counts on its US business operations for almost 50 percent of worldwide sales.
Pep Boys’ received an offer of $15-per-share in cash – a premium of 23.5 percent to its closing price on Wall Street last week. The company was established back in 1921 by four friends who invested $800 to open an auto parts store in Philadelphia, and has grossed to encompass around 800 locations – ready to compliment BSRO’s existing 2,200 centers. JP Morgan Securities LLC acted as financial advisor to Bridgestone, while Rothschild acted on Pep Boys’ behalf. The deal is expected to be finalized early next year.