Carl Icahn To Buy Remaining Shares Of Federal-Mogul, Privatize Company

In what seems to be a bid to grow his auto parts retailer investments, billionaire investor Carl Icahn is purchasing the remaining shares of auto supplier Federal-Mogul Holdings Corporation for $281 billion. The deal was done through a subsidiary of his firm, Icahn Enterprises, LP,  and gives Icahn the remaining 18 percent of the company's shares he did not already own. He will pay about $9 per share in the all-cash deal.

The purchase was unanimously approved by both companies' boards of directors. Federal-Mogul shareholders will vote to approve the deal at a later date, but should they give Icahn the green light, it would make the Michigan-based parts supplier the largest privately-held subsidiary of Icahn Enterprises.

Icahn's bid to buy the company came after the parts supplier scrapped it's plan to split into two separate entities back in January. Federal-Mogul had planned sever it's aftermarket division from it's powertrain division, but company officers pointed to less than ideal market conditions

Federal-Mogul's aftermarket parts branch produces some of the most well-known brands in the industry. Champion spark plugs, Wagner brakes, Anco wiper blades, Fel-Pro engine products, and MOOG chassis components all fall under the Federal-Mogul umbrella.

Last December, Icahn won a bidding war to purchase auto parts retailer Pep Boys for $103 billion. He then paired the chain with Auto Plus, the other retailer he has owned since June of 2015 when he bought the U.S. arm of Canadian parts distributor Uni-Select. Manny, Moe, and Jack are pictured at 800 Pep Boys locations across the United States, while Auto Plus operates 278 stores, making them the fifth-largest auto parts chain in the United States when combined. 

However, that is still significantly smaller than competitors Advance Auto Parts Inc, AutoZone Inc, and O'Reilly Automotive Inc. So Icahn's plan seems to be to use his Pep Boys and Auto Plus locations as a mainline to guarantee sales of Federal-Mogul parts. However, there is fear that this vertical integration strategy may harm the company in the long run.