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Icahn-Backed Tenneco Drops on CEO Shakeup Raising Breakup Doubts

Icahn-Backed Tenneco Drops on CEO Shakeup Raising Breakup Doubts

(Bloomberg) -- Shares of Tenneco Inc., the auto-parts maker backed by billionaire Carl Icahn, plunged after the company lost one of its co-chief executive officers and warned of ongoing challenges affecting plans for a breakup of its businesses.

Roger Wood, who was named co-CEO in July 2018 after Tenneco announced plans for a spinoff of two separate companies, is stepping down both from that job and as a director, the Lake Forest, Illinois-based company announced after the close of trading Tuesday. The shares fell as much as 11% on Wednesday, their biggest intraday drop since Oct. 31.

When Tenneco cut its forecast for revenue for a third time last year, the maker of shocks, struts and mufflers said that business conditions were affecting its ability to follow through with plans to separate its powertrain unit from its aftermarket and ride-performance businesses.

“The departure of Co-CEO Roger Wood raises questions of whether the spin is at risk,” Armintas Sinkevicius, an analyst at Morgan Stanley with the equivalent of a hold rating on Tenneco shares, wrote in a report. While the company wouldn’t address whether its statement suggests risk to meeting its guidance for 2019, investors likely will have concerns about estimates for the fourth quarter, he said.

Tenneco’s Breakup Further in Doubt as Weakness Endures: React

Tenneco initially announced the spinoff plan when it acquired Icahn-owned Federal-Mogul in April 2018 for $5.4 billion. Icahn, 83, is Tenneco’s largest shareholder with a 9.9% stake, according to data compiled by Bloomberg.

To contact the reporter on this story: Craig Trudell in New York at ctrudell1@bloomberg.net

To contact the editors responsible for this story: Craig Trudell at ctrudell1@bloomberg.net, Chester Dawson

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