Tenneco has agreed to acquire Federal-Mogul. Icahn Enterprises L.P. is selling Federal-Mogul for a total of $5.4 billion, to be funded through cash, Tenneco equity and assumption of debt.
Tenneco also announced its intention to separate the combined businesses into two independent, publicly traded companies-an aftermarket and ride performance company and a powertrain technology company.
The acquisition is expected to close in the second half of this year, subject to regulatory and shareholder approvals, with the separation occurring in the second half of next year.
“This is a landmark day for Tenneco with an acquisition that will transform the company by creating two strong leading global companies, each in an excellent position to capture opportunities unique to their respective markets,” said Brian Kesseler, CEO of Tenneco. “Federal-Mogul brings strong brands, products and capabilities that are complementary to Tenneco’s portfolio and in line with our successful growth strategies. Unleashing two new product focused companies with even stronger portfolios will allow them to move faster in executing on their specific growth priorities.”
“Today’s announcement is an extension of Tenneco’s proven strategies for delivering profitable growth and will accelerate each company’s ability to capitalize on trends that are fundamentally changing our industry,” said Gregg Sherrill, executive chairman at Tenneco. “This is a major step forward in building an even stronger position with the combination of strategically aligned companies and the subsequent separation of the businesses, realigned in such a way to unlock shareholder value.”
“Icahn Enterprises acquired majority control of Federal-Mogul in 2008 when we saw an out-of-favor market opportunity for a great company. During that time, we have built one of the leading global suppliers of automotive products,” said Carl C. Icahn, chairman of Icahn Enterprises. “I am very proud of the business we have built at Federal-Mogul and agree with Tenneco regarding the tremendous value in the business combination and separation into two companies. We expect to be meaningful stockholders of Tenneco going forward and are excited about the prospects for additional value creation.”
Aftermarket & Ride Performance Company
The combination of Tenneco’s ride performance business with Federal-Mogul’s motorparts business will create a portfolio of aftermarket brands including Monroe, Walker, Wagner, Champion, Fel-Pro and MOOG. On the OE side of the business, the combination creates a portfolio of braking and advanced suspension technologies and capabilities that set the foundation for meeting changing performance requirements for comfort and safety, according to the company.
Powertrain Technology Company
The powertrain technology company will combine Tenneco’s Clean Air product line and Federal Mogul’s powertrain business. According to the company, the combined business will offer products and systems solutions-from the engine to the tailpipe-to improve engine performance and meet tightening criteria pollutant regulations and fuel economy standards. This in turn will drive content growth due to the demand for improved engine performance, tightening emissions regulations, light vehicle hybridization and expanded market opportunities with commercial truck and off-highway customers.