Firestone Accepts $2.6-Billion Bid From Bridgestone : Firm OKs ‘Lock-Up’ Option; Directors Recommend Rejection of Rival Pirelli Offer
Firestone Tire & Rubber has agreed to be acquired by Japan’s Bridgestone Corp. in an $80-a-share buyout totaling nearly $2.6 billion, Firestone announced late Thursday.
Firestone also said its board recommended that shareholders reject the rival, unsolicited $58-a-share buyout offer from Italian tire maker Pirelli SpA.
In connection with the merger agreement, Firestone stated that it also had granted Bridgestone the option to buy an 18% stake in the company through the end of this year.
The agreement was announced several hours after the stock market closed. Firestone stock dipped 62.5 cents to $62.50 a share Thursday on the New York Stock Exchange.
Firestone on Feb. 16 had announced an agreement to sell 75% of its worldwide tire manufacturing business to Tokyo-based Bridgestone for $1.5 billion.
But that agreement foundered after Pirelli responded earlier this month by launching its tender offer, totaling about $1.9 billion, for the entire company.
Firestone stated earlier this week that its board had authorized management to pursue alternatives to the Pirelli offer and had reopened discussions with Bridgestone.
‘Lock-Up Option’
“The Bridgestone offer achieves our objective of enhancing shareholder values and will add materially to the employment security and career opportunities available to the men and women employed by Firestone’s existing businesses,” Chairman and Chief Executive John J. Nevin said in a news release announcing the deal.
Nevin said a Bridgestone subsidiary would begin a cash tender offer within the next few days for all of Firestone’s outstanding common shares.
The offer is subject to at least two-thirds of the shares being tendered and approval of the deal by Firestone shareholders.
Bridgestone also has an option to acquire up to 5.8 million shares held by Firestone’s treasury, a “lock-up” option that is typically granted to discourage hostile suitors.
Bridgestone President Akira Yeiri said all of Firestone’s existing plants in North America will continue to operate. Bridgestone plans to maintain the Firestone tire operation’s headquarters in Akron, Ohio, under current management.
“Our cooperation with Firestone over the years clearly demonstrates our sincerity in this regard as well as our commitment to the tire industry, both worldwide and in North America,” Yeiri said.
