Tenneco to buy Federal-Mogul for $5.4 billion

Tenneco to buy Federal-Mogul from Icahn in deal valued at $5.4B

Tenneco to buy Federal-Mogul, Stockwinners
Tenneco to buy Federal-Mogul

Tenneco (TEN) will acquire Federal-Mogul (IEP) for $5.4 billion through a combination of $800 million in cash, 5.7 million shares of Tenneco Class A common stock, 23.8 million shares of Non-Voting Class B common stock and assumption of debt.

Under the agreement, Tenneco can reduce the number of shares of Class B Non-Voting common stock by up to 7.3 million shares and increase the cash consideration proportionately at the closing.

Tenneco has put in place committed debt financing to fund the transaction, which will replace Tenneco’s existing senior credit facilities and certain senior facilities at Federal-Mogul.

Upon closing, Tenneco expects a pro forma net debt-to-adjusted EBITDA ratio of approximately 3x.

The company is targeting a net debt-to-adjusted EBITDA ratio of approximately 2.5x by the end of 2019.

Tenneco expects that the transaction will generate significant value for shareholders. Upon completion of the acquisition, Tenneco 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 & 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.

The powertrain technology company will be one of the largest pure play powertrain suppliers through the combination of Tenneco’s Clean Air product line and Federal Mogul’s Powertrain business, 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.

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.”

TEN closed at $55.55. IEP closed at $59.69.


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