Tenneco shares nearly doubled this morning: here’s why?

Shares of Tenneco Inc (NYSE: TEN) nearly doubled on Wednesday after Apollo Global Management Inc said it will buy the automotive components manufacturer for $1.64 billion in cash.

Details of the $20 a share agreement

The deal with the private equity company translates to $20 a share that represents a more than 100% premium on the price where TEN closed the regular session on Tuesday. The transaction is expected to complete in the back half of 2022.

Including debt, the enterprise value of the agreement stands at $7.10 billion. Tenneco Board of Directors has unanimously approved the deal, but a nod from its shareholders is still pending. Other customary closing conditions, including regulatory approval, are yet to be met as well.  

The press release this morning also confirmed that Apollo plans on taking Tenneco private upon closing the deal that is not subject to a financing condition. The company, however, will continue to operate under its name.

Important points in Tenneco’s Q4 results

Also on Wednesday, Tenneco reported its financial results for the fiscal fourth quarter. The Illinois-headquartered company lost $35 million in its recent quarter that translates to 42 cents a share. Adjusted for one-time items, its per-share loss came in at 11 cents.

At $4.40 billion, revenue was down 6.0% on a year-over-year basis. In comparison, analysts had called for 16 cents of per-share earnings in Q4 on $4.19 billion in revenue. CEO Brian 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.

Tenneco cancelled its earnings call after announcing the deal with Apollo.