Tenneco Inc (TEN)

A. Company Overview

Tenneco Inc. is a Delaware-based company that designs, manufactures, markets, and distributes products and services for various customers, including light vehicle, commercial truck, off-highway, industrial, motorsport, and aftermarket customers. Tenneco offers innovative performance solutions, clean air and powertrain products and systems, serving both original equipment (OE) manufacturers and the repair and replacement markets worldwide. The company was incorporated in 1996 as Tenneco Automotive Inc. and changed its name to Tenneco Inc. in 2005 to reflect its expanding market presence. Tenneco's Class A Voting Common Stock is traded on the New York Stock Exchange under the symbol "TEN."

In the first quarter of 2021, Tenneco made a change to its operating segments, moving a reporting unit from the Powertrain segment to the Ride Performance segment, which was subsequently renamed Performance Solutions. The company's four operating segments are Motorparts, Performance Solutions, Clean Air, and Powertrain.

B. Motorparts Segment

The Motorparts segment manufactures and distributes a range of brand-name products for the global vehicle aftermarket. Its product portfolio includes shocks and struts, steering and suspension components, brakes, sealing products, emissions control systems, engine parts, and maintenance products. Motorparts products are sold under various brand names such as Monroe, Champion, Öhlins, MOOG, Walker, Fel-Pro, Wagner, Ferodo, Rancho, Thrush, National, Sealed Power, among others.

C. Performance Solutions Segment

The Performance Solutions segment serves global OE customers and designs, manufactures, markets, and distributes a variety of products and systems to optimize the ride experience. Its product offerings include noise, vibration, and harshness (NVH) performance materials, advanced suspension technologies (AST), ride control systems, braking systems, and systems protection. Performance Solutions focuses on delivering ride performance products and is not tied to specific powertrain technologies.

D. Clean Air Segment

The Clean Air segment designs, manufactures, and distributes products and systems aimed at reducing pollution, optimizing engine performance, enhancing acoustic tuning, and reducing vehicle weight. The segment's products and systems are used in light vehicle, commercial truck, and off-highway OE applications.

E. Powertrain Segment

The Powertrain segment designs, manufactures, and distributes powertrain products for various applications, including light vehicles, commercial trucks, off-highway vehicles, and industrial applications. The segment's product offerings include pistons, piston rings, cylinder liners, valvetrain products, ignition products, engine bearings, and other engine components. The Powertrain segment serves OE customers for new vehicle production and also provides OES parts to support their service and distribution channels.

F. Proposed Merger

Tenneco has entered into an Agreement and Plan of Merger with Pegasus Holdings III, LLC, and Pegasus Merger Co. as wholly-owned subsidiaries of Parent. The Merger Agreement states that Merger Sub will merge with and into Tenneco, with Tenneco continuing as the surviving corporation and a wholly-owned subsidiary of Parent. The Merger is subject to various conditions, including regulatory approval and the adoption of the Merger Agreement by Tenneco's stockholders. If approved, the Merger is expected to close in the second half of 2022.

G. Sales, Marketing, and Distribution

Tenneco has separate sales and marketing efforts for its OE and aftermarket customers. It works closely with OE manufacturers throughout the production and post-production service stages, providing engineering support, product delivery, and customer service. For the aftermarket, Tenneco sells its products through various distribution channels, including wholesalers, retailers, service chains, and e-commerce channels. The company also invests in marketing efforts, such as advertisements and training programs, to promote its brands and products.

H. Business Strategy

Tenneco's business strategy revolves around optimizing operational performance, pursuing focused transactional opportunities, adapting the cost structure to economic realities, and leveraging its global presence and technological capabilities. The company aims to strengthen relationships with existing and emerging OE customers, maintain technological leadership, invest in applications benefiting from global BEV adoption, penetrate adjacent market segments, and emphasize its aftermarket go-to-market model to drive sustained revenue growth. Tenneco focuses on cost competitiveness, efficiency gains, innovation, and leveraging strategic partnerships to achieve its objectives.