LAKE FOREST, Illinois – Tenneco announced that it has signed a definitive agreement to acquire Federal-Mogul from Icahn Enterprises for $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 through a tax-free spinoff to shareholders that will establish an aftermarket and ride performance company and a powertrain technology company.
“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,” Tenneco CEO Brian Kesseler said. “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.”
The acquisition is expected to close in the second half of 2018, with the separation occurring in the second half of 2019.
“Icahn Enterprises acquired majority control of Federal-Mogul in 2008 when we saw an out-of-favor market opportunity for a great company,” said Carl Icahn, chairman of Icahn Enterprises. “During that time, we have built one of the leading global suppliers of automotive products. 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.”
New Operating Structure
When the acquisition is complete, Tenneco said it will operate the combined businesses “under a structure designed to begin concurrently the successful integration of Tenneco and Federal-Mogul and the separation of the aftermarket and ride performance and the powertrain technology companies.”
“The strategic combination of Tenneco’s Ride Performance business with Federal-Mogul’s Motorparts business will establish a global aftermarket leader with an impressive portfolio of some of the strongest brands in the aftermarket, including Monroe, Walker, Wagner, Champion, Fel-Pro and MOOG,” Tenneco said in a news release. “The company’s broader aftermarket product coverage, stronger distribution channels and enhanced channel development will strengthen its position in established and high-growth markets (China and India), and drive success through new mobility models and capturing evolving e-commerce opportunities.
“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, and ultimately reinventing the ride of the future with new solutions for ride differentiation and capitalizing on electrification and autonomous driving trends.”
Tenneco asserted that the powertrain technology company – combining Tenneco’s Clean Air product line and Federal Mogul’s Powertrain business – “will be one of the largest pure-play powertrain suppliers … bringing together market leaders with reputations for innovation in meeting the changing needs of customers.”
“The combined business will offer a robust portfolio of products and systems solutions – from the engine to the tailpipe – to improve engine performance and meet tightening criteria pollutant regulations and fuel economy standards,” Tenneco said. “With its global scale, the company 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.”
