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Carl Icahn won his bidding war with Bridgestone for Pep Boys.  - 

Autoparts chain Pep Boys has agreed to be acquired by financier Carl Icahn. Icahn had been in a bidding war with Bridgestone Corp. for the company, and he won with a bid of $1 billion, or about $18.50 per share. But the thing is, Icahn would have won even if he lost. 

Here's how: A while back, Icahn's company Icahn Enterprises bought a 12 percent stake in Pep Boys. Then he threatened to buy more, essentially taking Pep Boys over. That launched other bids for the company.

"Getting a bidding war going drives up the stock price," said Peter Cohan, who teaches strategy and entrepreneurship at Babson College in Massachusetts. So even if Icahn lost the bidding war, he can cash out at a profit. "He's done this over and over again," Cohan said.

In this case, Icahn will very likely get control of the company, which he can then rearrange or sell for parts as he has done with other companies in the past. Either way he wins.
In the more than 30 years that Icahn has been at this, a central element to his strategy has been cage rattling.

"He gets into a company that's not performing well, buys shares, gets on the board and frightens management," said Mark Stevens, author of "King Icahn" and CEO of marketing firm MSCO. "He threatens the guys that are running the company that they are going to lose their jobs or control of the company."

That's unless they do something to improve the stock price or dividends, to somehow reward investors — meaning reward Carl Icahn.

A common criticism of this approach is that it can be very short-term focused.

"What's the value that he's adding to the operations?" asked Cohan. "Really, zero."

Still, "those gains are not just for the activists but for all public-company shareholders," said Robert Jackson, professor of law at Columbia.

With the Pep Boys deal scheduled to close during the first three months of 2016, we'll see what Icahn does with it. But it's a safe bet that Pep Boys won't be the last cage he rattles.