Tenneco Inc., one of the world’s leading designers, manufacturers and marketers of Ride Performance and Clean Air products and technology solutions for automotive and commercial vehicle original equipment markets and the aftermarket, has announced that it has completed its acquisition of Federal-Mogul LLC, a leading global supplier to original equipment manufacturers and the aftermarket.
“Today marks an important step for Tenneco as we progress toward the transformation of our company into two strong, leading global businesses with the scale and financial flexibility to drive long-term value creation,” said Brian Kesseler, co-CEO, Tenneco.
The transformational acquisition, which was first announced in the second quarter of 2018, accelerates long-term value creation by creating two product-focused, purpose-built industry leaders in their respective markets with greater scale, and strategic and financial flexibility. This closing precedes the planned separation of the combined businesses into two independent, publicly traded companies through a tax-free spin-off to shareholders that will establish an Aftermarket and Ride Performance company and a Powertrain Technology company. The spin-off is expected to be complete in late 2019.
“This transaction makes possible the ability to create two new product-focused companies with even stronger portfolios positioned to capture unique opportunities in their respective markets,” said Roger Wood, co-CEO, Tenneco. “Now that we have completed the acquisition, we look forward to accelerating the successful realignment of the businesses and creation of the new companies.”
Cash consideration of $800 million was financed through a new senior credit facility that will replace Tenneco’s existing senior credit facilities and certain senior facilities of Federal-Mogul LLC. The new senior credit facility consists of a $1.7 billion term loan A, a $1.7 billion term loan B and a $1.5 billion revolving credit facility.
The company also announced the expansion of its board of directors from 10 to 11 members and the election to the board of directors of Mr. Keith Cozza, President and CEO, Icahn Enterprises L.P., effective today, in accordance with the terms of the Federal-Mogul purchase agreement.
Headquartered in Lake Forest, Illinois, Tenneco is one of the world’s leading designers, manufacturers and marketers of Ride Performance and Clean Air products and technology solutions for diversified markets, including light vehicle, commercial truck, off-highway equipment and the aftermarket, with 2017 revenues of $9.3 billion and approximately 32,000 employees worldwide.
On October 1, 2018, Tenneco completed the acquisition of Federal-Mogul, a leading global supplier to original equipment manufacturers and the aftermarket with nearly 55,000 employees globally and 2017 revenues of $7.8 billion. Additionally, the company expects to separate its businesses to form two new, independent companies, an Aftermarket and Ride Performance company as well as a new Powertrain Technology company, in late 2019.
About the Future Aftermarket and Ride Performance Company
Following the separation, the aftermarket and ride performance company will be one of the largest global multi-line, multi-brand aftermarket companies, and one of the largest global OE ride performance and braking companies. The aftermarket and ride performance company’s principal product brands will feature Monroe®, Walker®, Clevite®Elastomers, MOOG®, Fel-Pro®, Wagner®, Champion® and others. The Aftermarket and Ride Performance company would have 2017 pro-forma revenues of $6.4 billion, with 57% of those revenues from aftermarket and 43% from original equipment customers.
About the Future Powertrain Technology Company
Following the separation, the powertrain technology company will be one of the world’s largest pure-play powertrain companies serving OE markets worldwide with engineered solutions addressing fuel economy, power output, and criteria pollution requirements for gasoline, diesel and electrified powertrains. The powertrain technology company would have 2017 pro-forma revenues of $10.7 billion, serving light vehicle, commercial truck, off-highway and industrial markets.