Following the acquisition of Federal Mogul by former Marzocchi shocks owner Tenneco, the Lake Forest, Illinois (Chicago) based conglomerate is close to completing consolidation, realignment and rebranding of the $11.8 billion turnover, 81,000 employee 'Super Group'.
Just one of several large scale mergers and acquisitions to be seen in recent years as the automotive industry positions itself for the radical change it faces, Federal Mogul was sold to Tenneco by controversial billionaire activist investor Carl Icahan in 2018 for around $5.4bn.
Tenneco is best known for its ownership of the giant Monroe shock absorber business and, in motorcycle terms, followed up its 2015 acquisition and 2018 closure and sell-on of what was left of Marzocchi with the late 2018 acquisition of Swedish shock absorber manufacturer Öhlins from founder and Chairman Kenth Öhlin.
Tenneco CEO Brian Kesseler (who masterminded the Öhlins acquisition) used a January 2020 update to announce plans to streamline the leadership structure (he is now the sole CEO) and reinforce Tenneco's commitment to the planned spin-off of its Aftermarket and Ride Performance business - renamed in the spring of 2019 as "DRiV" - from the remaining Powertrain Technology business ("New Tenneco"), stating that this action "is part of a broader plan to accelerate the reduction of operational costs, improve cash flow performance and reduce leverage.
"During 2020, Tenneco will be focused on the execution of its accelerated performance improvement plan to facilitate the expected separation of the businesses. The company intends to provide additional details on this plan when it reports full year 2019 earnings.
The company says that it is ready to separate the businesses as soon as favourable conditions are present. "In order to facilitate the separation, the company continues to evaluate multiple strategic alternatives, as well as options to deleverage and mitigate the ongoing impact of challenging market conditions". An IPO (Initial Public Offering) is expected eventually.
 |
| In advance of the separation of DRiV, the newly renamed Ferodo, Champion and Öhlins owner that is being spun out of the combined Tenneco and Federal Mogul 'Super Group', has said that DRiV is being positioned for a possible stock market flotation as "one of the largest multi-line, multi-brand aftermarket and OE ride performance and braking companies in the world." |
Kesseler is quoted as saying: "The Tenneco Board and management team remain focused on delivering shareholder value. While we are making tangible progress to optimise our performance and right-size our cost structure, we continue to face a volatile industry environment which has created near-term headwinds. Streamlining our leadership structure is a first step in a comprehensive plan to further expand our margins, improve cash flows and lower our leverage profile. We believe these incremental actions will better position both businesses for the planned separation. This plan is modular and specifically tailored to each division to ensure continuous improvement even after the businesses are separated."
Tenneco will become a business focused on Powertrain Technology while DRiV will be "an Aftermarket and Ride Performance company" and "one of the largest global multi-line, multi-brand aftermarket companies, and one of the largest global OE ride performance and braking companies. DRiV's principal product brands will feature Monroe, Öhlins, Walker, Clevite, Elastomers, MOOG, Fel-Pro, Wagner, Ferodo and Champion among others.
Based on 2018 data, DRiV would have pro-forma revenues of $6.4 billion, with 54% of those revenues from aftermarket and 46% from original equipment customers. The new corporate name echoes the former name of an innovative product in the company’s Original Equipment advanced technology portfolio of patented road-smoothing electronic suspensions.
