Icahn to buy remaining shares of Federal-Mogul in $281 million deal

SOUTHFIELD, Mich.—Billionaire investor Carl Icahn is buying the remaining shares of Southfield-based auto supplier Federal-Mogul Corp. in a deal valued at approximately $281 million.

Icahn, through a subsidiary of his firm Icahn Enterprises L.P., entered into a definitive agreement Tuesday with Federal-Mogul to acquire the remaining 18 percent of stock. Icahn offered to pay $9.25 per share in an all-cash deal—which represents 86 percent higher than the supplier's share price of $4.98 on Feb. 26, when Icahn first proposed the buyout for $7 per share.

Both companies' board of directors have approved the deal unanimously, Federal-Mogul said in a news release. Federal-Mogul shareholders will vote to approve the transaction at an undetermined future date.

Upon approval, Federal-Mogul will become a privately-held subsidiary of Icahn Enterprises and no longer traded on the NASDAQ.

The bid to buy the minority stake comes after Federal-Mogul scrapped its plan in January to split the company into two separate public entities. Company officers pointed to market conditions as the culprit behind its decision not to split its aftermarket parts division from its powertrain division.

In December, Icahn won a $1.03 billion bidding war for auto parts retail chain Pep Boys. Experts believe Icahn plans to use the parts retailer as a mainline for Federal-Mogul parts but fear his vertical integration strategy will hurt the company over the long term.

Pep Boys' 800 stores, paired with Icahn's other aftermarket retailer, the 278-location Auto Plus, would make up the fifth largest retail auto parts chain in the U.S. Even with Pep Boys' stores, Auto Plus would be significantly smaller than rivals Advance Auto Parts Inc., Autozone Inc. and O'Reilly Automotive Inc.

It's unclear whether Icahn taking full control of Federal-Mogul would expedite that process.