NASHVILLE—The merger between Bridgestone Americas and Pep Boys—Manny Moe and Jack, threatened by a competing bid for Pep Boys from Carl Icahn, is back on again. Bridgestone subsidiary Bridgestone Retail Operations said late Friday afternoon it had matched Icahn Enterprises' offer of $15.50 per share, or approximately $863 million, while the Pep Boys board said it no longer considered the Icahn bid a "superior proposal" as defined in the Oct. 26 merger agreement it signed with Bridgestone.

Earlier in the week the agreement had threatened to go off the rails. Having received Icahn's counteroffer, the Pep Boys board at first said it probably constituted a superior proposal, then declared that it was superior and gave Bridgestone three days to match it. The Oct. 26 merger agreement called for Bridgestone to pay $835 million, or $15 per share.

In a letter to the Pep Boys board made public on Monday, Keith Cozza, president and CEO of Icahn Capital, wrote that 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." Cozza's letter asserted that an acquisition by his firm would require no due diligence. Pep Boys had rejected a $13.50/share offer from Icahn this past September.

"The joining of Bridgestone and Pep Boys combines the expertise of nearly 200 years and a proud heritage in the American automotive aftermarket industry," says T.J. Higgins, president, consumer US and Canada, Bridgestone Americas Tire Operations. "Both of our companies take immense pride in the skill of our employees, those in the bays and behind the counters of our stores. Bringing that technical talent together with our shared dedication to customer service will create a better, not just bigger, tire and automotive service retailer, and one that is positioned to best meet consumer needs."

However, the stock market appears to hold the view that Pep Boys ultimately will sell for greater than $15.50 per share. Shares of the auto parts and service retail chain closed at $16.34 on Friday.

Share prices on Pep Boys stock began rising in late May on market speculation about a possible sale, including a Wall Street Journal report that identified Golden Gate Capital as a potential buyer. Pep Boys announced on June 30 that its board was exploring strategic alternatives, including a possible sale.

In January 2012, GlobeSt.com reported on an agreement which the 94-year-old retail operator signed with private equity firm the Gores Group to be taken private for approximately $800 million, a deal that gave the chain an enterprise value of about $1 billion. By May of that year, however, the deal was called off, after the buyer walked away amid a disappointing report of first-quarter results at Pep Boys' locations across 35 states and Puerto Rico.

If the Pep Boys deal goes through, it will add approximately 800 locations and 7,500 service bays to Bridgestone Retail's nationwide network of 2,200 tire and automotive service centers, which operate under the Firestone Complete Auto Care, Tires Plus, Hibdon Tires Plus and Wheel Works brand banners. Bridgestone also has a network of more than 5,000 dealers and distributors of its branded tires across the US. Reportedly the merger will create the world's largest retail chain of its kind.