Tenneco set to acquire Federal-Mogul in $5.4 billion deal
April 11, 2018
Tenneco, headquartered in Lake Forest, Illinois, USA, has signed a definitive agreement to acquire Federal-Mogul, Southfields, Michigan, USA, from Icahn Enterprises L.P. for $5.4 billion. Subject to regulatory and shareholder approvals and other customary closing conditions, the acquisition is expected to close in the second half of 2018.
Tenneco also announced its intention to separate the combined businesses into two independent, publicly traded companies through a tax-free spin-off to shareholders. The move, scheduled for the second half of 2019, will establish an Aftermarket & Ride Performance company and a Powertrain Technology company.
Brian Kesseler, Tenneco’s CEO, stated, “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. 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.”
“Icahn Enterprises acquired majority control of Federal-Mogul in 2008 when we saw an out-of-favour market opportunity for a great company. During that time, we have built one of the leading global suppliers of automotive products,” commented 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.”
The combination of Tenneco’s Ride Performance business with Federal-Mogul’s Motorparts business, forming the Aftermarket & Ride Performance company, will establish a global aftermarket presence with a portfolio of what it states are some of the strongest brands in the market, including Monroe®, Walker®, Wagner®, Champion®, Fel-Pro® and MOOG®. This broader aftermarket product coverage, stronger distribution channels, and enhanced channel development is expected to strengthen its position in established and high growth markets such as China and India.
Through the combination of Tenneco’s Clean Air product line and Federal Mogul’s Powertrain business, Tenneco stated that the new Powertrain Technology company will provide a robust portfolio of products and systems solutions – from the engine to the tailpipe – that improve engine performance and meet tightening criteria pollutant regulations and fuel economy standards.
“Today’s announcement is an extension of Tenneco’s proven strategies for delivering profitable growth and will accelerate each company’s ability to capitalise on trends that are fundamentally changing our industry,” added Gregg Sherrill, Executive Chairman, 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.”