Icahn Will Assume Ownership of Federal-Mogul (FDML)

Carl Icahn, the billionaire activist investor famous for speaking his mind, often at the expense of niceties with the companies in which he invests, will take full ownership of the Michigan-based auto parts manufacturer and supplier Federal-Mogul Holdings (FDML). The announcement of the deal, made by Bloomberg, comes after several months of highly publicized conversations and posturing between the investor and the company. The deal will be worth approximately $300 million, and comes after Icahn formerly owned about 82% of the company via his stock position.

The manner by which Icahn will be able to buy up the remaining 18% or so of Federal-Mogul stock was reported by Bloomberg as well. The second-largest shareholder of the company after Icahn himself, Gabelli Asset Management Company, decided to tender about 7 million shares to the billionaire, giving Icahn the necessary majority of stock in his possession that he could take over the public company as a whole. Icahn Enterprises, Icahn's hedge fund, announced the deal late last week, noting that the final step of the purchase is part of a year-long project on Icahn's part. For the past several months, the billionaire has worked to fully acquire the supplier, which focuses on aftermarket brands of automotive parts including Champion spark plugs, Wagner breaks, and Anco wiper blades.

In order to convince Gabelli to sell, Icahn increased his offer of $9.25 per share to $10 per share. Icahn made the offer on January 3rd, and the deal was confirmed by two weeks later. The arrangement for Icahn to attempt to buy up the remaining shares has been in lace since February of 2016, though, when Icahn initially offered $7 per share. By June he had increased his offer to $8 per share.  Then, in September, he moved the bid to $9.25 per share in an all-cash deal, marking an 86% premium on the supplier's share price from February, when Icahn first suggested that he would buy out the company.

Icahn's interest in the Federal-Mogul purchase came after the supplier backed down from an early 2015 plan to divide the company into two separate divisions, one for aftermarket parts and one for powertrain. Icahn has a long history of investments in automotive companies; in late 2015, he won a bidding war of over $1 billion for the auto parts chain Pep Boys. He also owns aftermarket retailer Auto Plus. Experts believe that Icahn is looking to use those companies as retailers for Federal-Mogul parts. However, there is fear among experts that this type of vertical integration may actually hurt the supplier over time. Between Pep Boys and Auto Plus, Icahn has close to 1100 stores, constituting the fifth-largest retail auto parts store grouping in the country.