Apollo Funds to Acquire Tenneco for $7.1B; Shares Surge 94%

Shares of original equipment manufacturer (OEM) Tenneco, Inc. (NYSE: TEN) jumped almost 94% after it was revealed that funds managed by affiliates of Apollo (NYSE: APO) have signed an agreement to acquire the company for around $7.1 billion in cash.

The offer price of $22 per share represents a premium of 100.4% over the closing price of Tenneco’s shares on February 22.

Commenting on the deal, Dennis Letham, the Chairman of Tenneco’s Board, said, “We believe this transaction is the right path forward and achieves our goal of maximizing value for Tenneco shareholders, and will benefit our team members, customers and business partners around the world.”

The CEO of Tenneco, Brian Kesseler, said, “This partnership will allow us to continue to invest in and grow Tenneco’s multiple segments and global footprint.”

Following the completion of the acquisition, which is expected in the second half of this year, the Illinois-based company will stop trading on the New York Stock Exchange.

Q4 Results

Meanwhile, Tenneco has also announced its financial results for the fourth quarter of 2021.

The company reported a loss of $0.11 per share, compared to the year-ago profit of $1.68 per share and the Street’s estimate of a profit of $0.16 per share.

Total revenue declined 6% year-over-year to $4.4 billion, exceeding analysts’ expectations of $4.14 billion. Value-add revenue fell 7% to $3.3 billion.

Kesseler said, “In a challenging market and inflationary environment, Tenneco stayed focused on driving operational improvement, disciplined cost control, and strong cash generation, which enabled a reduction in net debt and net leverage ratio improvement year-over-year.”

About Tenneco

Tenneco designs, manufactures and sells engineered products for both original equipment vehicle manufacturers and the repair and replacement markets. It has a team of 73,000 employees working at over 270 sites across the world.

Price Target

Based on 1 Buy and 3 Holds, the stock has a Hold consensus rating. The average Tenneco price target of $17.25 implies nearly 11% downside potential from current levels. Shares have gained 87% over the past year.

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