Icahn gains full control of Federal-Mogul

SOUTHFIELD, Mich. (Jan. 19, 2017) — Billionaire investor Carl Icahn will take full ownership of Southfield-based auto parts supplier Federal-Mogul Holdings Corp. for roughly $300 million.

Icahn Enterprises L.P., through Mr. Icahn's indirect wholly owned subsidiary IEH FM Holdings L.L.C., sealed the deal after Federal-Mogul's second-largest shareholder Gabelli Asset Management Company Investors tendered 7 million shares to Mr. Icahn, providing enough shares to take over the public company outright, Bloomberg reported.

Mr. Icahn previously owned 82 percent of the Federal-Mogul shares.

The deal, announced Jan. 19 by Icahn Enterprises, ends a nearly year-long quest for Mr. Icahn to acquire the supplier.

On Jan. 3, Mr. Icahn offered $10 per share, up from a previous offer of $9.25 per share, to acquire the remaining shares

In February, Mr. Icahn entered into a definitive agreement to acquire the remaining shares, offering $7 per share, then raised the bid to $8 per share in June. By September, Mr. Icahn increased the bid again to pay $9.25 per share in an all-cash deal, which represented an 86-percent premium on the supplier's share price of $4.98 on Feb. 26, when Mr. Icahn first proposed the buyout.

The bid comes after Federal-Mogul scrapped its plan in January 2015 to split the company into two separate public entities. Company officers pointed to market conditions as the culprit behind its decision not to split its aftermarket parts division from its powertrain division.

In December 2015, Icahn won a $1.03 billion bidding war for auto parts retail chain Pep Boys. Experts believe Mr. Icahn plans to use the parts retailer as a mainline for Federal-Mogul parts but fear his vertical integration strategy will hurt the company over the long term.

Pep Boys' 800 stores, paired with Mr. Icahn's other aftermarket retailer, the 278-location Auto Plus, would make up the fifth-largest retail auto parts chain in the U.S. Even with Pep Boys' stores, Auto Plus would be significantly smaller than rivals Advance Auto Parts Inc., Autozone Inc. and O'Reilly Automotive Inc.

It's unclear whether Icahn's taking full control of Federal-Mogul would expedite that process.

Federal-Mogul shares traded at $10.01, just above Icahn's offer, on the morning of Jan. 19.

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Dustin Walsh is a reporter with Crain's Detroit Business, a sister publication of Tire Business.