Apollo Global Management Inc. has offered to buy Tenneco Inc.’s powertrain business for $4.3 billion, according to people familiar with the matter.
The private equity firm’s bid, described by people who asked not to be identified because the matter isn’t public, represents a significant sum relative to the $7 billion enterprise value of the auto supplier. The Lake Forest, Ill.,-based company’s stock had dropped 52 percent this year through Monday’s close as earnings have slumped.
Tenneco shares rose 7.8 percent to close at $14.28 on Tuesday, the highest since Nov. 12, after the Wall Street Journal first reported Apollo’s bid. The Journal said Tenneco is likely to reject Apollo’s offer because it includes several adjustments and doesn’t assume pension and other liabilities linked to the powertrain unit.
Apollo declined to comment. A spokesman for Tenneco didn’t immediately respond to requests for comment.
Tenneco has cut its forecast for revenue three times this year and its projection for adjusted EBITDA twice. The maker of shocks, struts and mufflers has been struggling to follow through with plans to separate its powertrain unit from its aftermarket and ride-performance business, a spinoff the company announced when it acquired Carl Icahn-owned Federal-Mogul in April 2018 for $5.4 billion.
Tenneco ranks No. 26 on the Automotive News list of the top 100 global suppliers, with worldwide sales to automakers of $10 billion in 2018.