Federal-Mogul delays split into 2 public companies
By Dustin Walsh, Crain News Service
DETROIT (Feb. 27, 2015) — Federal-Mogul Corp., the powertrain and aftermarket parts supplier controlled by Wall Street investment mogul Carl Icahn, said this week it will delay a prior plan to split into two separate public companies during the first half of this year.
Following reporting a net loss of $185 million on revenue of $1.8 billion in the fourth quarter of 2014, the decision was made to delay the split to allow for integration of recent acquisitions, the company said.
Last year, the supplier acquired the chassis components business of Affinia Group Inc. for an undisclosed amount, the brake business of Honeywell International Inc. for $155 million and the engine valve business from TRW Automotive Holdings Corp. for $385 million.
The supplier's board of directors will revisit the timing of the split by year-end, the company said in its earnings release on Feb. 24.
The separation will occur through a tax-free distribution of shares from its aftermarket parts division, which it renamed Federal-Mogul Motorparts in May, to current Federal-Mogul shareholders, the company announced in September.
Federal-Mogul began restructuring its aftermarket parts division in 2012. The company historically underperformed in the aftermarket space, which led to red ink, including a $117 million loss in 2012 and a $90 million loss in 2011.
But that division has been recovering and reported revenue of $822 million in the fourth quarter of 2014 compared to $727 million during the same quarter in 2013, an increase of 17 percent. For the entire year, the Motorparts division reported revenue increased by 10 percent to $3.2 billion, up $257 million from $2.9 billion in 2013.
“The Motorparts division made significant progress on a number of initiatives designed to accelerate profitable growth and provide better service and value to our customers,” Daniel Ninivaggi, Federal-Mogul co-CEO and CEO of its Motorparts division, said in a news release.
After factoring out one-time charges, Federal-Mogul said it posted $11 million in adjusted net income in the fourth quarter, which was flat from the same quarter last year.
For the year, the company said it posted adjusted earnings of $153 million on revenue of $7.3 billion compared with adjusted earnings of $130 million on revenue of $6.8 billion in 2013.
Reporter Jack Walsworth contributed to this report, which appeared on the website of Automotive News, a Detroit-based sister publication of Tire Business.
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