Apollo to take Tenneco private for $7.1bn

May 2022 | DEALFRONT | PRIVATE EQUITY & VENTURE CAPITAL

Financier Worldwide Magazine

May 2022 Issue

In a deal that takes the company private, global automotive manufacturing company Tenneco is to be acquired by funds managed by affiliates of Apollo Global in an all-cash transaction valued at approximately $7.1bn, including debt.

Under the terms of the definitive agreement, Tenneco shareholders will receive $20 per share in cash, representing a 100.4 percent premium. The transaction is expected to close in the second half of 2022.

One of the world’s leading designers, manufacturers and marketers of automotive products for original equipment and aftermarket customers, Tenneco has approximately 73,000 team members working at more than 270 sites worldwide.

Through its four business groups – Motorparts, Performance Solutions, Clean Air and Powertrain – Tenneco is driving advancements in global mobility by delivering technology solutions for diversified global markets, including light vehicle, commercial truck, off-highway, industrial, motorsport and the aftermarket.

“This agreement with Apollo will deliver immediate and certain cash value to Tenneco shareholders at a substantial premium,” said Dennis Letham, chairman of Tenneco. “The board’s decision follows careful evaluation of the transaction and thoughtful and comprehensive review of value creation opportunities. We believe this transaction is the right path forward and achieves our goal of maximising value for Tenneco shareholders.”

Unanimously approved by the Tenneco board, the transaction is subject to customary closing conditions, including approval by Tenneco shareholders and receipt of regulatory approvals. The transaction is not subject to a financing condition.

“This transaction marks a significant milestone and will provide us with a new and exciting platform from which we can continue our global strategy in an evolving and dynamic mobility landscape,” added Brian Kesseler, chief executive of Tenneco. “In Apollo, we have a partner that recognises the strength of our product portfolio and our ability to serve leading original equipment manufacturers (OEM) and aftermarket blue-chip customers globally.”

Upon completion of the transaction, Tenneco’s shares will no longer trade on the New York Stock Exchange, and Tenneco will become a private company. Tenneco will continue to operate under the Tenneco name and brand and maintain a global presence.

A global, high-growth alternative asset manager with approximately $498bn of assets under management (AUM), for more than three decades, Apollo’s investing expertise across its fully integrated platform has provided businesses with innovative capital solutions for growth.

“Tenneco is a key solutions provider for global mobility markets with a long-held commitment to innovation and high-quality service,” said Michael Reiss, a partner at Apollo. “We look forward to working with the Tenneco team to build on the strong foundation in place today, investing across their platform and product categories for growth and delivering innovative solutions for customers.”

Lazard is serving as financial adviser to Tenneco and Latham & Watkins LLP is acting as legal counsel. For Apollo, Rothschild & Co acted as lead financial adviser to the Apollo Funds, while BofA Securities and Citi acted as financial advisers. Wachtell, Lipton, Rosen & Katz served as legal counsel and Paul, Weiss, Rifkind, Wharton & Garrison LLP served as financing counsel.

Mr Kesseler concluded: “This transaction is also a testament to the achievements of our global team, whose commitment and focus during these extraordinary times have enabled our success.”

Fraser Tennant