Icahn sweetens bid for Pep Boys to more than $1 billion

Billionaire investor Carl Icahn raised his offer for Pep Boys to $18.50 a share in cash, or more than $1 billion, escalating a bidding war with Bridgestone Corp. for the car-parts chain.

In announcing the proposal on Monday, Icahn Enterprises said it would be willing to pay an even higher price, so long as Pep Boys doesn’t increase the termination fee in its deal with Bridgestone. The automotive retailer agreed to a sweetened, $17-a-share takeover offer from Bridgestone last week, following an earlier bid from Icahn.

Pep Boys later Monday said its board determined Icahn's offer to be a superior proposal and that it has moved to terminate its previous agreement with Bridgestone. The tire company now has until 5 p.m. ET on Thursday to respond.

"Any further decisions will be made based on what continues to make business and financial sense for Bridgestone and aligns with our long-term growth strategy," Bridgestone said in a statement today. "We are unable to comment further."

Icahn's offer is not subject to any due diligence, financing or antitrust conditions.

The takeover battle for Pep Boys underscores the confidence Icahn and Bridgestone have in the U.S. auto-parts retailing industry, which has benefited from an aging vehicle fleet on American roads.