Apollo Global Management Inc. said Wednesday it agreed to pay a roughly 100% premium to buy Tenneco Inc., sending shares of the clean air and powertrain system manufacturer up sharply.
stock jumped 96% to $19.53 in premarket trading. The stock traded close to Apollo’s
take-private price of $20 a share, roughly double the stock’s closing price of $9.98 a share on Tuesday.
Shares of Apollo Global Management dipped 0.3% in premarket trades.
The deal’s $7.1 billion value includes about $1.6 billion for all outstanding shares of Tenneco, plus the assumption of the company’s debt.
For Apollo, the deal ranks as its largest buyout since its $7.5 billion acquisition of Lumen Technologies in August.
The firm has been “incredibly active” in merger and acquisitions overall with a string of fresh deals including Ingenico TSS (from Worldline), Novolex, Legendary Entertainment, ABC Technologies, a spokesperson for the firm said in an email to MarketWatch. The firm is also a non-voting financing partner to Standard General in the Tegna buyout.
The price of $7.1 billion for Tenneco values the Lake Forest, Ill. company at about 39% of its full-year 2021 revenue of $18 billion, or 12.8 times its $556 million in 2021 earnings before interest and taxes.
The deal awaits a vote by shareholders after the Tenneco board approved it unanimously. It’s expected to close in the second half of 2022.
Tenneco chairman Dennis Letham and Tenneco CEO Brian Kesseler said the deal will deliver value to shareholders.
“The board’s decision follows careful evaluation of the transaction and thoughtful and comprehensive review of value creation opportunities,” Letham said in a statement.
Kesseler said the transaction with Apollo “will allow us to continue to invest in and grow Tenneco’s multiple segments and global footprint.”
Apollo partner Michael Reiss led the deal for the New York-based private-equity firm.
Reiss joined Apollo in 2008 after working on the financial sponsor’s investment banking unit at Deutsche Bank.
He is on the board of directors of Presidio, and previously served on the boards of Affinion Group and Captain Bidco SAS, the parent of Ascometal SAS.
Tenneco’s stock has lost 6.7% over the past 12 months through Tuesday, while Apollo shares have run up 25.2% and the S&P 500 index
has climbed 10.9%.