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Tenneco (TEN) to Buy Federal-Mogul From Carl Icahn for $5.4B


Tenneco Inc. TEN announced its plan to purchase automotive supplier Federal-Mogul for $5.4 billion from Icahn Enterprises LP, run by the activist and investor Carl Icahn, per Reuters. Tenneco anticipates the deal to close later this year.

Auto parts manufacturer Tenneco also intends to divide the company into two independent, publicly traded entities in the second half of 2019. One will comprise the powertrain products while the other will include auto parts such as suspensions and axle dampers. Through this deal, Icahn Enterprises will receive $800 million in cash and 29.5 million shares from Tenneco.

Southfield, MI-based Federal-Mogul is an automotive supplier that offers quality products, trusted brands and creative solutions to manufacturers of automotive, light-commercial, heavy-duty and off-highway vehicles as well as to power generation, aerospace, marine, rail and industrial manufacturers. The company sells products under several brands, including Champion, Interfil and Goetze. Icahn Enterprises acquired the majority control of Federal-Mogul in 2008. On the other hand, Lake Forest, IL-based Tenneco manufactures products, including catalytic converters, diesel-particulate filters and shock absorbers.

In the past six months, Tenneco has underperformed the industry it belongs to. Its shares have declined 5.5% compared with the industry’s decline of 0.6%.

Tenneco carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

A few other top-ranked stocks in the auto space are Honda Motor Co., Ltd. HMC, Allison Transmission Holdings, Inc. ALSN and Toyota Motor Corporation TM. While both Honda and Allison Transmission Holdings sport a Zacks Rank #1, Toyota carries a Zacks Rank #2.

Honda has expected long-term growth rate of 5.2%. In the past year, shares of the company have returned 23.8%.

Allison Transmission has expected long-term growth rate of 10%. In a year, shares of the company have returned 13.2%.

Toyota has expected long-term growth rate of 6.1%. Shares of the company have advanced 21.7% in the past year.

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