Federal-Mogul Holdings Corporation plans to separate its Powertrain and Motorparts divisions, spinning off the Motorparts division to shareholders, resulting in two independent, publicly-traded companies. The decision was announced almost two years to the day after Federal-Mogul reorganized as two separately managed organizations, one producing powertrain components and one supplying aftermarket brake, suspension, steering, and other parts.
"By separating the Powertrain and Motorparts divisions of Federal-Mogul we are creating two independent, market-leading companies that will be among the largest and strongest in their respective peer groups globally,” explained chairman Carl Icahn.
The company said its objective is to complete the spin-off of Federal-Mogul Motorparts in the first half of 2015.
The chairman noted that both new businesses would be well capitalized after the split. He claimed the new Federal-Mogul Motorparts business will have a strong balance sheet and access to capital, which will allow it to pursue acquisitions in the automotive aftermarket segment.
Federal-Mogul Motorparts sells and distributes more than 20 brands of automotive aftermarket wiper blades, spark plugs, wipers and filters; engine products; steering and suspension parts; and brake products.
"Since creating the Motorparts division in 2012, we have made solid progress in developing and implementing a strategic plan to take advantage of the growing and increasingly complex global car parc," explained co-CEO Daniel Ninivaggi.
He, too, offered assurance that the structure of the separation would provide Federal-Mogul Motorparts with better financial and operating flexibility “to pursue growth and consolidation opportunities.”
Icahn said the Federal-Mogul Powertrain business would benefit from more focused management and better allocation of resources in line with its priorities.
Federal-Mogul Powertrain designs and manufactures powertrain components to original equipment manufacturers, including pistons, piston rings, cylinder liners, valve seats, valve guides, bearings, spark plugs, and more at over 70 plants and 12 engineering centers around the world.
"The Powertrain division, focused on providing our customers with the technologies they need to meet today's and tomorrow's challenges, will continue to grow organically based upon our superior offerings," said co-CEO Rainer Jueckstock. “We will also pursue market opportunities to expand our scope, size and footprint, focusing on core components for combustion engines that offer a strong strategic fit with our existing portfolio.”