Shareholder trying to pressure Tenneco into changes

LAKE FOREST, Ill.—An activist shareholder is trying to exert pressure on automotive parts maker Tenneco Inc. to make changes that could include sale of the company.

Daniel Ninivaggi, a former long-time associate of famed corporate raider Carl Icahn, is putting pressure on the Lake Forest-based company, including a demand to replace half the board, sell off portions of the business to raise cash to pay off debt or sell the firm completely, according to a Bloomberg report.

Word of Ninivaggi's moves comes as Tenneco continues to search for a path to divide portions of itself following a 2018 acquisition of Federal-Mogul from Icahn Enterprises L.P.

Icahn and his affiliates own 92 percent of the publicly traded Icahn Enterprises, a holding company invested in a wide variety of industries, including energy, metals and sausage casings.

Icahn Enterprises, received a portion of Tenneco shares through the agreement to sell Federal-Mogul two years ago. But part of that deal also included a "standstill agreement" that effectively puts the company on the sidelines for now.

That agreement, according to paperwork filed with the U.S. Securities and Exchange Commission, prohibits Icahn Enterprises and affiliates from acquiring additional shares. Icahn Enterprises also agreed to vote in favor of directors nominated and recommended by Tenneco's board during the standstill agreement.

But Niniviggi, formerly co-CEO of Federal-Mogul and CEO of Icahn Automotive, is pursuing changes through his own Protean Services L.L.C. Icahn Automotive owns well-known consumer-facing brands including Pep Boys and Aamco.

Pressure from Ninivaggi comes at a time when Tenneco also is shuffling its leadership.

Brian Kesseler is consolidating his power at the top of Tenneco, moving from co-CEO to CEO. Roger Wood, former co-CEO and director, left the company abruptly Jan. 7.

The leadership change and external pressure comes as Tenneco said the company looks to separate its Aftermarket and Ride Performance business to a company called Driv Inc. The firm's existing Powertrain Technology business then would become the new Tenneco.

But "current end-market conditions are affecting the company's ability to complete a separation in the mid-year 2020 time range," Tenneco said in a statement. "The company expects that these trends will continue throughout the year."

Tenneco already has completed what it calls "all necessary system and process components" needed for the company to separate. It now is just waiting for business conditions to improve.

Tenneco earlier had identified a mid-2020 timeframe for the separation, but said the timing is now uncertain.

"Streamlining our leadership structure is a first step in a comprehensive plan to further expand our margins, improve cash flows and lower our leverage profile. We believe these incremental actions will better position both businesses for the planned separation," Kesseler said in a statement.

Tenneco's broad portfolio includes the Clevite brand of elastomer products designed to address noise, vibration and harshness in automotive applications.

Clevite will become part of the new DRiV operation, along with other automotive parts brands such as Monroe and Wagner.

The deal for Federal-Mogul also brought Tenneco a large automotive sealing operation, including the more than 100-year-old Fel-Pro gasket business.