Carl C. Icahn, chairman of Icahn Enterprises.
The debt heavy auto parts company Federal-Mogul, owned by Carl Icahn’s company, is being sold in a deal worth about $5.4 billion.
Icahn Enterprises will get $800 million in cash and 29.5 million shares from buyer Tenneco. The Lake Forest, Ill. auto parts maker said Tuesday that it will split the company into two parts, both to be traded publicly.
Icahn Enterprises bought a majority stake in Federal Mogul in 2008 and took full ownership of the company last year.
Tenneco expects the deal to close later this year and it plans to split the Southfield, Mich.-based company’s auto parts and powertrain technology wings into individual entities in 2019.
Analysis from Bloomberg, via MEMA
“Icahn Enterprises acquired majority control of Federal-Mogul in 2008 when we saw an out-of-favor market opportunity for a great company. 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. This transaction is an excellent example of our general modus operandi at Icahn Enterprises, by which we seek to acquire undervalued assets, nurture, guide and improve their condition and operations, and ultimately develop them into more valuable businesses, which greatly enhances value for all shareholders,” stated Carl C. Icahn, chairman of Icahn Enterprises.
Brian Kesseler, chief executive officer of Tenneco added, “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. 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.”