American Motorcycle Dealer AMD 250 May 2020 | Page 26

THE BRADLEY REPORT
Tenneco Closing In On Plans
BRIEFS To Separate DRiV Ride
Performance Division
NEWS
Lawrence G. Hund, 64, President and
Chief Operating Officer of Harley-
Davidson Financial Services, Inc.
(HDFS) has been promoted to Chief
Commercial Officer of Harley-
Davidson Motor Company, Inc. Hund
will be responsible for the global
sales function including the
company’s motorcycle Parts and
Accessories, General Merchandise
and Harley-Davidson Museum
businesses, additionally becoming
Chairman of the board of directors of
HDFS. Jonathan Root, 46, has been
promoted to Senior Vice President,
HDFS, and will succeed Hund in
his role.
In USA data from IHS Markit
shows a 41% decline in national
automobile registration volume
on a week-over-week basis for
the week of March 23. The
states experiencing the most
significant deterioration in
automobile volume are New
York (-85%), California (-78%),
Texas (-43%) and Florida (-16%).
Automotive production for
North America is projected to
fall by -2.3m units to 14.1m
units for 2020; with European
automotive production
expected to decline by -3.0m
units to 18.1m in 2020.
Yamaha Motor Co., Ltd. announced
that nine-time World Champion
Valentino Rossi will ride his last
season as a Yamaha Factory Racing
MotoGP Team rider in 2020.
Following discussions together,
Yamaha and Rossi have mutually
agreed that the decision as to
whether the Italian will remain an
active rider in the MotoGP World
Championship in 2021 will be taken
mid-2020. This will be Rossi's 15th
year with the Yamaha Factory Racing
MotoGP Team. Should Rossi decide
to continue as a MotoGP rider in
2021, Yamaha assures Rossi of the
availability of a factory-spec YZR-M1
bike and full Yamaha Motor Co., Ltd.
engineering support.
Benelli QJ (Pesaro, Italy) has
donated two pulmonary
ventilators and 1,000 Tyvek
suits (high protection material)
to the Pesaro Committee of the
Italian Red Cross and 3,500
Tyvek suits to the Ospedali
Riuniti Marche Nord hospital.
Benelli was founded in Italy in
1911, initially as the Benelli
Garage repair shop. It was
bought by Qianjiang Group
(Geely) in 2005.
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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.
Federal Mogul owns several
businesses and brands with significant
sales and profile in the international
motorcycle industry, including Italy
based brake pad maker Ferodo and
Champion air filters (and automotive
spark plugs).
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
AMERICAN MOTORCYCLE DEALER - MAY 2020
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."
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.
Kesseler is quoted as saying: "The
Tenneco Board and management
team remain focused on delivering
shareholder value. While we are
making tangible progress to optimize
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, hlins, 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.
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