S&P Revises Outlook on Pep Boys (PBY) to CreditWatch Negative

Standard & Poor’s Ratings Services revised the CreditWatch placement on its ratings on Philadelphia-based Pep Boys–Manny, Moe & Jack (NYSE: PBY), including the 'B' corporate credit rating, to negative from developing.

The CreditWatch revision follows Pep Boys’ announcement that Icahn Enterprises L.P.’s latest bid to acquire the company is a superior proposal to Bridgestone Corp.’s. This outcome was reached after a series of back and forth bids between the two bidders that began in October 2015. On Dec. 30, 2015, Pep Boys terminated its merger agreement with Bridgestone. While no capital structure details have been disclosed regarding the Icahn acquisition, we believe there is at least a 50% chance that leverage would increase from current levels by the Icahn purchase.

We will resolve the CreditWatch placement on Pep Boys as we receive more information on how the purchase by Icahn Enterprises will be financed.

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