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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