PHILADELPHIA—Auto parts and service chain Pep Boys—Manny, Moe & Jack said Tuesday that its board had reviewed Carl Icahn's competing bid to acquire the company and that Icahn's offer for $15.50 per share probably constituted a "superior proposal" compared to its merger agreement with Bridgestone Retail Operations. That agreement, first announced in October, would have the Nashville-based Bridgestone acquire Pep Boys and its 800-plus stores for $835 million, or $15 per share.

The board's determination allows it to give Icahn's proposal additional consideration. In and of itself, though, "this determination does not allow the company to terminate the Bridgestone agreement, nor enter into a definitive transaction with Icahn, both of which can also only occur in accordance with the procedures set forth in the Bridgestone agreement," according to a company statement. At present, the board hasn't changed its recommendation with respect to the Bridgestone transaction, "nor is it making any recommendation with respect to the Icahn proposal."

In a letter to the Pep Boys board made public on Monday, Keith Cozza, president and CEO of Icahn Capital, wrote that was his company was ready "to enter immediately into the exact same merger agreement that Pep Boys executed with Bridgestone Retail Operations LLC. In addition, we will enter into any reasonable further agreements that you may require in order to provide greater certainty of closing."

On Friday, Icahn disclosed an approximately 12% stake in Pep Boys, which he wants to merge with his Auto Plus chain. This past October, Pep Boys had rejected a $13.50/share offer from Icahn. A 2012 buyout by the Gores Group fell apart after the buyer walked away amid a disappointing quarterly report from Pep Boys.