Pep Boys-Manny Moe and Jack (NYSE: PBY)
Thanks to recent takeover bids, Pep Boys has become an incredibly fun stock to watch as of late. Now, the bidding war is getting more fierce and it’s thanks to Carl Icahn’s desire to take the company over. Recently, Icahn changed his bid in an attempt to ensure victory in the bidding wars. Today, we’ll talk about what Icahn now bids to take over PBY, who Icahn is bidding against, how the market is reacting to the recent news, and what we can expect to see from PBY moving forward.
Carl Icahn Increases His Bid For PBY
Before Christmas, Carl Icahn made a bid to take over Pep Boys in a massive sale valued at $16.50 per share. However, yesterday Icahn changed his mind and decided to offer more. Now the billionaire investor is putting $18.50 per share on the line. So, what made Icahn up the ante? Well, it’s Bridgestone Corp. (BRDCY). Bridgestone is a Japanese manufacturing company that’s heavily focused on the tire industry. After Icahn made his bid of $16.50 per share, Bridgestone stepped in and offered $17 per share on Christmas Eve. As a result, the bidding war has commenced. However, instead of nickle and diming the bid, Icahn threw all of his chips on the table, raising his bid by $2 per share in a single move.
How The Market Is Reacting To The News
Ultimately, investors love to see take overs, especially when the price of the take over is at a premium. By bidding $18.50 per share to take over PBY, Icahn has offered a premium and fueled quite a bit of investor excitement. So naturally, the stock is up in a big way. While it is still very early in the day, PBY is currently (9:35) trading at $18.78 per share after a gain of 7.87%.
Who Will Win The Bidding War
While it’s clear that Bridgestone wants to take over PBY, it’s not likely that they’ll get the opportunity if Icahn keeps showing the cash he’s got on hand. You’ll notice Bridgestone upped Icahn’s original bid by a mere $0.50, but when Icahn responded, he responded with a $1.50 increase on what Bridgestone was offering. What I’m getting at here is that Icahn is taking a very aggressive role and making it clear that he’s not going to step down from this bidding war. As one of the richest men on the planet today, not only does he have the desire to take the company over, he’s got the cash to back up his plan! With that said, in the case of PBY, I’m expecting that Icahn is going to win the race.
What We Can Expect To See Moving Forward
While the outcome is unclear, one thing is certain: Bidding wars move prices upward. As the bidding war continues between Icahn and Bridgestone, we’re likely to see PBY continue increasing in value. However, that’s not the only reason PBY deserves to grow. The reality is that Pep Boys is a great company with a great management team. The company has a proven record of success and will likely continue the trend. Ultimately, this bidding war is simply helping PBY realize the growth the stock deserves.
What Do You Think?
Where do you think PBY is headed and why? Let us know your opinion in the comments below!
[Image Courtesy of Wikipedia]
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