Auto parts and repair company Pep Boys has just been sold to Japanese tire and auto service company Bridgestone Corp. for $835 million in a deal that will close at the beginning of next year.
Pep Boys has been around for 94 years. However, the company has been struggling for a while now: its total revenue for the fiscal year ending January 28 was $2.08 billion, up only 1% from the previous year.
Bridgestone, on the other hand, is the world’s largest tire and rubber company, and it has been looking for an opportunity to expand American sales.
“This transaction delivers a significant premium for Pep Boys’s shareholders and offers new opportunities for our employees across a bigger business,” said Pep Boys CEO Scott Sider.
Pep Boys attempted to change its situation back in 2012, when private investment firm Gores Group planned a roughly $800 million acquisition of the company. However, Gores Group pulled out due to concerns with the slumping business Pep Boys was experiencing at the time.
The deal with Bridgestone, however, could offer some serious benefits for both parties. Bridgestone’s retail network will be boosted by more than a third in the US, where it is looking to expand. Bridgestone already earns more than half of its total sales from its U.S. business interactions.
“Our shared expertise and commitment to our customers and employees will help us build an even stronger organization,” said Gary Garfield, CEO and President of Bridgestone America, which is based in Nashville, TN.
Bridgestone is set to pay $15 a share for a total of 800 stores in 35 states. Time will tell if their purchase will in fact bolster both companies.
Pep Boys is currently headquartered in Philadelphia, where there are 500 management and support jobs. The current plan is for HQ to stay open as is, but it’s possible operations may be moved to Tennessee once the purchase is finalized.