Categories Earnings

Carl Icahn to sell Federal-Mogul to Tenneco for $5.4 billion

Almost after a decade after acquiring a major stake in auto-parts maker Federal-Mogul, billionaire activist Carl Icahn has decided to sell the unit to its rival Tenneco (TEN) for $5.4 billion.

Courtesy -Flickr

Tenneco witnessed a rise in its share on the news that it entered into a definitive agreement to acquire Federal-Mogul from Icahn Enterprises L.P. (IEP).  Ichan, who has been at the center of insider trading allegations for selling his $30 million stake in crane maker Manitowac just before Trump’s tariff announcement, will have 36% of Tenneco’s voting stock.

According to Bloomberg, Icahn sold the unit — whose products include brake parts, wipers blades, and spark plugs — because Federal-Mogul customer’s highlighted that Icahn played the role of both a supplier and a competitor with the auto-related holdings.

Just last year, the investor had acquired the complete ownership in the Southfield-based company in a deal valued at approx.. $300 million and then returned it to a privately held firm. Prior to this, Icahn had just 82% ownership in Federal-Mogul.

The deal  — which will be funded through cash, Tenneco equity and assumption of debt– is expected to close later this year and is expected to offer a great value to shareholders.

Post the deal, Tenneco – which sells its products under brand names Gillet and Walker — plans to segregate the joined entities into two publicly traded companies, and this process is due in 2019. The deal is expected to produce a synergy of approx. $200 million in annual earnings. This is the latest deal in the auto supplier industry that is currently undergoing a stage of transition.

Icahn has recently been heavily investing in transportation-related assets including ride-sharing company Lyft Inc, and Hertz Global Holdings Inc. – a rental car provider.  But the latest move is a deviation from Icahn’s vision of having a major control over the replacement parts business.

Most Popular

Earnings calendar for the week of May 17

Benchmark stock indexes pared their recent gains early this week amid elevated inflation concerns, but regained a part of the momentum later aided by recovery in tech stocks. The Dow

Aurora Cannabis (ACB) Earnings: 3Q21 Key Numbers

Aurora Cannabis Inc. (NYSE: ACB) reported third quarter 2021 earnings results today. Total revenues fell 25% year-over-year to CAD55.1 million. Adjusted EBITDA loss amounted to CAD24 million. Cash balance as

Walt Disney (DIS) Q2 revenue down 13%; earnings beat estimates

Media behemoth The Walt Disney Company (NYSE: DIS) reported second-quarter revenues that declined from last year as customers stayed away from theatres and parks due to pandemic-related safety issues and

Tags

Add Comment
Loading...
Cancel
Viewing Highlight
Loading...
Highlight
Close
Top