Federal-Mogul splits in two distinct companies image

The auto parts supplier Federal-Mogul announced it will split into two companies, one to make and sell replacement parts and the other to produce powertrain and engine parts for new cars.

Federal-Mogul Motorparts will sell brands like Champion Spark Plugs and Anco wipers while looking to aquire other brands. Meanwhile, Federal-Mogul Powertrain will design and make components for carmakers that improve fuel economy, reduce emissions and enhance performance.

Daniel Ninivaggi, leader for the Federal-Mogul Motorparts said that “The real strategy is to really globalize the company and build a world-class aftermarket supplier. We have made two acquisitions in the last six months. We want to do more.”

The company, controlled by activist investor Carl Icahn, is expecting the transaction to be completed in the first six months of 2015.

Icahn said in a statement that “By separating the powertrain and motorparts divisions of Federal-Mogul, we are creating two independent, market-leading companies. Upon separation both businesses will be well-capitalized and poised for stand-alone success.”

Shares of Federal-Mogul rose this week 2.26% to $17.65, which is however a decrease from a 52-week high of $22.97 on January 8. Federal-Mogul emerged from bankruptcy in December 2007 and has now annual sales of about $6.8 billion. The company has been working as a holding company with two separate divisions since 2012 and renamed its components division Federal-Mogul Motorparts in April.

By Gabriela Florea