Skip to main content
Sister Publication Links
  • Rubber News
  • European Rubber Journal
Subscribe
  • Login
  • Register
  • Subscribe
  • Current Issue
  • BEST PLACES TO WORK
  • News
    • HUMANITARIAN
    • TIRE MAKERS
    • COMMERCIAL TIRE
    • GOVERNMENT & LAW
    • MERGERS & ACQUISITIONS
    • OBITUARIES
    • OPINION
    • MID YEAR REPORT
    • SERVICE ZONE
  • ADAS
  • Data
    • DATA STORE
  • Custom
    • SPONSORED CONTENT
  • Resources
    • Events
    • DIRECTORY
    • CLASSIFIEDS
    • SHOP FLOOR
    • AWARDS
    • ASK THE EXPERT
    • LIVESTREAMS
    • WEBINARS
    • SEMA LIVESTREAMS
    • RUBBER NEWS EVENTS
    • BALANCING
    • DEMOUNTING
    • SAFETY
    • TIRE REPAIR
    • TPMS
    • TRAINING
    • VEHICLE LIFTING
    • WHEEL TORQUE
    • Best Places to Work
  • ADVERTISE
  • DIGITAL EDITION
MENU
Breadcrumb
  1. Home
  2. News
April 19, 2018 02:00 AM

Icahn's payoff from Federal-Mogul could increase in 2019

Lindsay Chappell, Automotive News,
  • Tweet
  • Share
  • Share
  • Email
  • More
    Print
    Automotive News photo
    Carl Icahn

    DETROIT — Investor Carl Icahn will pocket $800 million in cash and $4.6 billion worth of Tenneco Inc. stock in the deal announced last week to sell his privately owned parts and aftermarket supplier, Federal-Mogul L.L.C., to the Chicago maker of Walker exhaust systems and Monroe shocks.

    But the real money could come in 2019, when the newly merged suppliers regroup and de-merge into two new companies.

    Tenneco's plan is to take the powertrain components business of Federal-Mogul, combine it with Tenneco's clean-air parts business, and spin the entity off as a new supplier with sales of $10.7 billion, according to materials presented to investors last week.

    The combined businesses will offer a portfolio of engine-to-tailpipe products and system solutions, Tenneco CEO Brian Kesseler told analysts last week. "The combination of capabilities offers our customers more options on how to efficiently improve fuel economy and meet regulations," he said.

    What will remain after the spinoff would consist primarily of Federal-Mogul's aftermarket and brake-parts business, plus Tenneco's suspension products — a company with global sales of $6.7 billion, based on current activity levels.

    The deal is the culmination of years of big-picture maneuvering at Federal-Mogul, No. 45 on Automotive News' list of the 100 largest global parts suppliers to auto makers.

    The company owns multiple auto parts brands, including Champion spark plugs, Beru glow plugs, Anco, Fel-Pro and MOOG.

    Mr. Icahn, an 82-year-old investor estimated by Forbes to have a net worth of $16.6 billion, became famous in the 1980s for a pattern of buying into companies such as Trans World Airlines and pressing them to restructure and sell off assets.

    Last year his Icahn Enterprises paid $300 million to take 100 percent control of the parts company in which it already owned the majority. Icahn also is a large investor in ride-hailing company Lyft Inc., has a controlling interest in Hertz Global Holdings Inc. and owns outright Pep Boys - Manny, Moe & Jack , Auto Plus, American Driveline Systems — franchisor of the AAMCO Total Car Care and Cottman Transmission & Total Auto Care businesses — and Precision Auto Care Inc.

    The Tenneco-Federal-Mogul deal, when finalized later this year, will give him control of 36 percent of Tenneco's stock.

    Tenneco, No. 31 on Automotive News' suppliers list, is also rich in recognized automotive brands, including Monroe, Walker, Rancho and DynoMax.

    The merger and spinoff plan might also fix a simmering customer problem for Federal-Mogul. Some of the company's retail customers, such as Pep Boys and AutoZone, have grumbled that Federal-Mogul is also their competitor, since Icahn last year bought the 320-store Precision Tune auto service chain.

    "Anytime there's a perceived channel conflict between an owner and its customers, it gets a little more exciting," Mr. Kesseler said. "So I do think it  —getting the aftermarket business standing off on its own — is good."

    Letter
    to the
    Editor

    Do you have an opinion about this story? Do you have some thoughts you'd like to share with our readers? Tire Business would love to hear from you. Email your letter to Editor Don Detore at [email protected].

    Most Popular
    1
    Five tire makers earn GM Supplier of the Year awards
    2
    Yokohama, Trelleborg Wheel deal earns final regulatory approval
    3
    Nokian introduces all-terrain tire for N.A. market
    4
    Saudi tire plant backers target construction in 2024
    5
    Continental EV strategy stays consistent
    SIGN UP FOR NEWSLETTERS
    EMAIL ADDRESS

    Please enter a valid email address.

    Please enter your email address.

    Please verify captcha.

    Please select at least one newsletter to subscribe.

    Newsletter Center

    Staying current is easy with Tire Business delivered straight to your inbox.

    SUBSCRIBE TODAY

    Subscribe to Tire Business

    SUBSCRIBE
    Connect with Us
    • Facebook
    • LinkedIn
    • Twitter
    • Instagram
    • RSS

    Our Mission

    Tire Business is an award-winning publication dedicated to providing the latest news, data and insights into the tire and automotive service industries.

    Reader Services
    • Staff
    • About Us
    • Site Map
    • Industry Sites
    • Order Reprints
    • Customer Service: 877-320-1716
    Partner Sites
    • Rubber News
    • European Rubber Journal
    • Automotive News
    • Plastics News
    • Urethanes Technology
    RESOURCES
    • Advertise
    • Privacy Policy
    • Privacy Request
    • Terms of Service
    • Media Guide
    • Editorial Calendar
    • Classified Rates
    • Digital Edition
    • Careers
    • Ad Choices Ad Choices
    Copyright © 1996-2023. Crain Communications, Inc. All Rights Reserved.
    • BEST PLACES TO WORK
    • News
      • HUMANITARIAN
      • TIRE MAKERS
      • COMMERCIAL TIRE
      • GOVERNMENT & LAW
      • MERGERS & ACQUISITIONS
      • OBITUARIES
      • OPINION
      • MID YEAR REPORT
      • SERVICE ZONE
    • ADAS
    • Data
      • DATA STORE
    • Custom
      • SPONSORED CONTENT
    • Resources
      • Events
        • ASK THE EXPERT
        • LIVESTREAMS
        • WEBINARS
        • SEMA LIVESTREAMS
        • RUBBER NEWS EVENTS
      • DIRECTORY
      • CLASSIFIEDS
      • SHOP FLOOR
        • BALANCING
        • DEMOUNTING
        • SAFETY
        • TIRE REPAIR
        • TPMS
        • TRAINING
        • VEHICLE LIFTING
        • WHEEL TORQUE
      • AWARDS
        • Best Places to Work
    • ADVERTISE
    • DIGITAL EDITION