Automotive components and systems supplier Tenneco has announced that it has signed a definitive agreement to acquire Federal-Mogul, a leading global automotive supplier to both the original equipment sector and the aftermarket. The deal, with current Federal-Mogul owners Icahn Enterprises L.P, is worth $5.4 billion.

Tenneco also announced its intention to separate the combined businesses into two independent, publicly traded companies through a tax-free spin-off to shareholders that will establish an aftermarket and ride performance company and a powertrain technology company.

The deal is expected to conclude in the second half of 2018, with the separation occurring in the second half of 2019.

Brian Kesseler, CEO, Tenneco 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.  Unleashing two new product focused companies with even stronger portfolios will allow them to move faster in executing on their specific growth priorities.”

The strategic combination of Tenneco’s Ride Performance business with Federal-Mogul’s Motorparts business will establish a global aftermarket leader with an impressive portfolio of some of the strongest brands in the aftermarket including Monroe, Walker, Wagner, Champion, Fel-Pro and MOOG.  On the OE side of the business, the combination creates a portfolio of braking and advanced suspension technologies and capabilities that set the foundation for meeting changing performance requirements for comfort and safety.

The powertrain technology company will be one of the largest pure play powertrain suppliers through the combination of Tenneco’s Clean Air product line and Federal Mogul’s Powertrain business, bringing together market leaders with reputations for innovation in meeting the changing needs of customers.