TRW Automotive Holdings Corp. will be selling its engine valve business to Federal-Mogul Holdings Corp for $385 million in cash. The move will allow Federal-Mogul to strengthen its powertrain division and also allow TRW to focus all its efforts on its safety technology business.
TRW’s engine valve business generated $610 million in revenues last year and has a workforce of 5,400 across 12 countries.
There have been an increasing number of mergers and acquisitions in the auto industry this year, and Federal-Mogul’s decision to buy the TRW unit comes amid rumors of Carl Icahn wanting to sell either a part or all of his shares in the company. Icahn is a Wall Street investor and holds majority of the shares of Federal-Mogul. Earlier this year in July, German auto parts maker ZF Friedrichshafen AG had also made an offer to buy TRW for over $10 billion, which was reportedly the biggest deal in the automotive supply chain industry in years.
The U.S.-based global manufacturer of vehicle safety products and powertrain components incurred $117 million in losses in 2012 and $90 million in 2011. Federal-Mogul owns a number of well-known brands such as ANCO wiper blades, Champion spark plugs, and Wagner brakes, despite which it has been reportedly underperforming. The acquisition, too, had no positive impact on Wall Street, with Federal-Mogul shares dropping over 15% on the year to $16.69. The company ranks 50 on the top 100 global suppliers’ list by Automotive News, while TRW, on the other hand, is No.11. Federal-Mogul recorded an estimated $4.2 billion in global original-equipment sales in 2013, while TRW recorded $16.1 billion in the same year.