News from Notch Consulting, Inc.

April 12, 2018

Tenneco to buy Federal-Mogul for $5.4 billion, then split into 2 companies

Filed under: Auto — Notch @ 12:25 pm

Automotive supplier Tenneco Inc. has reached a definitive agreement to acquire Federal-Mogul in a transaction valued at $5.4 billion.

The deal, which will be financed through $800 million in cash, about 30 million Tenneco shares and assumption of debt, will result in two independent publicly traded companies following closing, Lake Forest, Ill.-based Tenneco said in a press release.

The acquisition is expected to close in the second half of this year, subject to regulatory approvals, with the separation occurring in the second half of 2019.

“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 in the release. “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 transaction stands to shake up the world of aftermarket parts retailing. Federal-Mogul’s parts portfolio features numerous household names such as Champion spark plugs, Wagner brakes, ANCO wiper blades, Moog steering and suspension parts, Goetze engine parts, and Ferodo brake pads. Popular brands under the Tenneco portfolio include Monroe shock absorbers, Walker exhaust systems, Rancho suspensions and DynoMax mufflers.

The two new companies will be born after the union of Tenneco and Federal-Mogul — one a $6.4 billion aftermarket supplier and the other a $10.7 billion powertrain technology supplier, the company said.

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Toyo ‘nano’ process could cut truck/bus tire rolling resistance

Filed under: Carbon Black, Tires — Notch @ 12:10 pm

Toyo Tire & Rubber Co. Ltd. is heralding an advancement in rubber compounding technology that it claims will yield measurable reductions in rolling resistance in truck tires.

The tire maker anticipates having a commercially viable truck/bus tire using the technology on the market within a year.

Although Toyo declined to quantify how much of a rolling resistance reduction it expects, it said the development related to its “nano balance” compounding technology, which yields a 20 percent reduction in energy loss at the point of deformation.

Toyo defines nano balance technology as one for developing ideal rubber materials with high precision through observation, prediction, function, creation and control of rubber materials at the molecular (nano) level. The firm first disclosed its work on nano balance in 2011 when it launched the NanoEnergy line of tires in Japan.

Technically speaking, the nano technology focuses on optimizing the dispersion of fillers in rubber.

Toyo’s process disintegrates carbon black in a special solution and disperses it at the molecular level in the initial compound creation process while stirring and coagulating natural rubber latex, the company said.

Improvements in the process over the past six years have yielded a processing method that achieves the “ideal state” of filler where it is uniformly and highly dispersed even in solid rubber like natural rubber.

Toyo already has released in Japan a truck tire using the technology, NanoEnergy M676, which it claims offers a 31-percent reduction in rolling resistance vs. an existing Toyo design.

Continental expects growth in replacement tire demand

Filed under: Tires — Notch @ 11:32 am

Continental A.G. expects demand for consumer and commercial vehicle replacement tires to grow 3 and 2 percent in 2018, respectively, with Asia contributing more than half of the growth.

Replacement demand for passenger/light truck tires should rise to 1.25 billion units, Conti said, citing IHS Inc. an LMC International Ltd. figures. Demand for medium/heavy-duty commercial vehicle tires is seen rising to 166.3 million units.

China will be the driver of the global market expansion due to further growth in that nation’s vehicle parc, Conti said. Demand is also forecast to grow in India, Indonesia and South Korea. Total Asian growth is pegged at 5 percent.

Continental expects demand in North America to recover soon, partly as a result of the continuing rise in mileage. Replacement consumer tire sales should rise roughly 1.8 percent to 290 million units, while sales of commercial vehicle tires are seen rising 3.3 percent to 25.3 million.

In Europe, Conti anticipates growth in eastern Europe to boost overall replacement consumer tire demand by roughly 2 percent, to 358 million units.

In South America, Conti expects 4 percent growth in demand.

The company expects increased demand for commercial vehicle tires to grow in all regions, with Asia again playing a key role, accounting for nearly half of the expected increase in demand.

Citing figures from LMC International, Conti put global sales of passenger/light truck tires in 2017 at 1.21 billion units, led by Asia with 453 billion and followed by Europe with 351 million, North America with 235 million, Latin America with 73 million and the rest of the world at 47 million.

Global sales of tires for commercial vehicles was 162.5 million units—up 4.7 percent over 2016—with Asia accounting for 89.2 million units, followed by Europe (25.3 million), North America (24.5 million), Latin America (15.7 million) and the rest of the world (7.8 million).

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