Auto parts maker Tenneco (NYSE: TEN) is buying Federal-Mogul from Carl Icahn's Icahn Enterprises (NASDAQ: IEP) in a deal worth $5.4 billion in cash and stock.
Tenneco will then separate the combined companies into two separate stocks in a tax-free spinoff, one focusing on "aftermarket and ride performance," the other on "powertrain technology."
Said Icahn, "We expect to be meaningful stockholders of Tenneco going forward and are excited about the prospects for additional value creation.
"This transaction is an excellent example of our general modus operandi at Icahn Enterprises, by which we seek to acquire undervalued assets, nurture, guide and improve their condition and operations, and ultimately develop them into more valuable businesses, which greatly enhances value for all shareholders."
Tenneco CEO Brian Kesseler said “This is a landmark day for Tenneco with an acquisition that will transform the company by creating two strong leading global companies, each in an excellent position to capture opportunities unique to their respective markets.
“Federal-Mogul brings strong brands, products and capabilities that are complementary to Tenneco’s portfolio and in line with our successful growth strategies."
Icahn acquired control of Federal Mogul, a maker of wiper blades and spark plugs, in 2008. The activist investor then took it private in January 2017.
The sale, made up of $800 million in cash and 29.5 million shares of Tenneco stock, is expected to close in the second half of the year.
Tenneco shares gushed $3.77, or 6.8%, to $59.32, while Icahn Enterprises popped $1.58, or 2.6%, to $61.27
