International Dealer News IDN 153 February/March 2020 | Page 14

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Tenneco closing in on
plans to separate DRiV
Ride Performance division
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
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."
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
14
INTERNATIONAL DEALER NEWS - FEBRUARY/MARCH 2020
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 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.
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