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Federal-Mogul (Goetze) stock jumps 10% as Tenneco Inc. to acquire the group globally

Tenneco Inc. will be acquiring Federal-Mogul group for $5.4bn
Tenneco Inc. (Tenneco), one of the world’s largest auto ancillary companies, is set to acquire Federal-Mogul LLC, the ultimate global parent of Federal-Mogul Goetze (India) Limited (FMGIL). Tenneco will be acquiring Federal-Mogul group for $5.4bn, through a combination of $800mn in cash, 5.7mn shares of Tenneco Class A common stock (representing a 9.9% voting interest), 23.8mn shares of Non-Voting Class B common stock and assumption of debt. Under the agreement, Tenneco can reduce the number of shares of Class B Non-Voting common stock by up to 7.3mn shares and increase the cash consideration proportionately at the closing.

The acquisition aims to bring together two complementary businesses – Tenneco Ride Performance and Federal-Mogul Motorparts, and the powertrain technology company will include Tenneco Clean Air and Federal-Mogul Powertrain. It will also improve the geographical positioning of the new entity in markets such as Americas, EMEA (Europe, Middle East and Africa) region, Asia Pacific region.

The acquisition is expected to close in H2CY18. As per the press release from FMGIL, the acquisition is expected to be value accretive and generate synergy opportunities of at least $200mn in annual earnings and $250mn in working capital.

Upon completion of the acquisition, Tenneco will operate the combined businesses under a structure designed to begin concurrently the successful integration of Tenneco and Federal-Mogul and the separation of the aftermarket & ride performance and the powertrain technology companies.