On January 10, 2019, the Company completed the acquisition of a 90.5% ownership interest in Öhlins for a purchase price of $162 million (including $4 million of cash acquired). The remaining 9.5% ownership interest in Öhlins was retained by Köhlin. Köhlin has an irrevocable right at any time after the third anniversary of the Öhlins Acquisition to sell the KÖ Interest to the Company. Refer to Note 2, “Summary of Significant Accounting Policies”, for further information on the KÖ Interest. During the year ended December 31, 2019, the Company adjusted the initial allocation of the total purchase consideration, which resulted in a $14 million increase to goodwill.


	Initial Allocation		Adjustments		Final Allocation
Cash, cash equivalents, and restricted cash	$	4	$	—	$	4
Customer notes and accounts receivable	19		—		19
Inventories	31		—		31
Prepayments and other current assets	2		—		2
Property, plant, and equipment	8		—		8
Goodwill	28		14		42
Intangibles	135		(2)		133
Other assets	9		—		9
Total assets acquired	236		12		248

Short-term debt, including current maturities of long-term debt	10		—		10
Accounts payable	11		—		11
Accrued compensation and employee benefits	12		—		12
Deferred income taxes	18		12		30
Deferred credits and other liabilities	6		—		6
Total liabilities assumed	57		12		69
Redeemable noncontrolling interest	17		—		17
Net assets acquired	$	162	$	—	$	162

Goodwill of $42 million was recognized as part of the acquisition and is reflected in the Ride Performance segment. The goodwill consists of the Company’s expected future economic benefits that will result from the acquisition of Öhlins’ technology, which will allow the Company to more rapidly grow its product offerings for current and future customers, as well as assist the Company in obtaining a larger share of business in developing mobility markets. None of the goodwill is deductible for tax purposes.


	Estimated Fair Value		Weighted-Average Useful Lives
Definite-lived intangible assets:
Customer platforms and relationships	$	37	10 years
Technology rights	41		10 years
Total definite-lived intangible assets	78

Indefinite-lived intangible assets:
Trade names and trademarks	55
Total	$	133

The Company recorded a $5 million step-up of inventory to its fair value as of the acquisition date and recognized $5 million as a non-cash charge to cost of goods sold during the year ended December 31, 2019 related to the amortization of this step-up, as the acquired inventory was sold.

On October 1, 2018, the Company closed on the acquisition of all of the interests in Federal-Mogul pursuant to the Membership Interest Purchase Agreement, dated as of April 10, 2018 (the “Purchase Agreement”), by and among the Company, Federal-Mogul, American Entertainment Properties Corporation (“AEP” and, together with certain affiliated entities, the “Sellers”) and Icahn Enterprises L.P. (“IEP”). Total consideration was approximately $3.7 billion. Following the completion of the Federal-Mogul Acquisition, Federal-Mogul was merged with and into the Company, with the Company continuing as the surviving company.

At the effective date of the Federal-Mogul Acquisition, the Company's certificate of incorporation was amended and restated (the “Amended and Restated Certificate of Incorporation”) in order to create a new class of non-voting convertible common stock of the Company called “Class B Non-Voting Common Stock” (“Class B Common Stock”) with 25,000,000 shares authorized, and to reclassify the Company's existing common stock as “Class A Voting Common Stock” (“Class A Common Stock” and, together with the Class B Common Stock, the “common stock”). Refer to Note 18, “Shareholders' Equity” for additional information on the conversion features of the Class B Common Stock. On the same date, the Company also entered into a new credit facility in connection with the Federal-Mogul Acquisition. The new credit facility includes $4.9 billion of total debt financing, consisting of a five-year $1.5 billion revolving credit facility, a five-year $1.7 billion term loan A facility and a seven-year $1.7 billion term loan B facility. Refer to Note 11, “Debt and Other Financing Arrangements”, for additional information.

Under the Amended and Restated Certificate of Incorporation, the authorized number of shares was increased from 185,000,000 shares, divided into 135,000,000 shares of common stock, par value $0.01, and 50,000,000 shares of preferred stock, par value $0.01, to 250,000,000 shares, divided into 175,000,000 shares of Class A Common Stock, 25,000,000 shares of Class B Common Stock and 50,000,000 shares of preferred stock, par value $0.01.

The Company (i) paid to AEP an aggregate amount in cash equal to $800 million (the “Cash Consideration”) and (ii) issued and delivered to AEP an aggregate of 29,444,846 shares of common stock at $41.99 per share (the “Stock Consideration”). The $1.2 billion of common stock was comprised of: (a) 5,651,177 shares of Class A Common Stock, par value $0.01 equal to 9.9 percent of the aggregate number of shares of Class A Common Stock issued and outstanding immediately following the closing, and (b) 23,793,669 shares of newly created Class B Common Stock, par value $0.01. The remaining consideration of approximately $1.7 billion was comprised primarily of the repayments of certain Federal-Mogul debt obligations.

Advisory costs associated with the Federal-Mogul Acquisition were $68 million for the year ended December 31, 2018 and were recognized as a component of “Selling, general, and administrative” expenses in the consolidated statements of income (loss).


Tenneco shares issued for purchase of Federal-Mogul	29,444,846
Tenneco share price at October 1, 2018	$	41.99
Fair value of the Stock Consideration	1,236

Cash Consideration(a)	811
Repayment of Federal-Mogul debt and accrued interest (b)	1,660
Total consideration	$	3,707

(b) Portion of the proceeds from the issuance of the $4.9 billion new credit facility that was used to repay Federal-Mogul’s term loan and revolver loan of $1,455 million and $200 million, and the related accrued interest of $5 million.

Goodwill of $803 million was recognized as part of the Federal-Mogul Acquisition, of which $343 million was allocated to the Powertrain segment, $395 million was allocated to the Motorparts segment, and $65 million was allocated to the Ride Performance segment. The goodwill consists of the Company's expected future economic benefits that will arise from expected future product sales and synergies from combining Federal-Mogul with its existing portfolio of products. None of the goodwill is deductible for tax purposes. Refer to Note 7, “Goodwill and Other Intangible Assets” for additional information on goodwill impairment charges incurred.

The Company recorded a $149 million step-up of inventory to its fair value as of the acquisition date. The Company recognized non-cash charges to cost of goods sold of $44 million and $105 million for the years ended December 31, 2019 and 2018.

The Company's consolidated statements of income (loss) included net sales and operating revenues of $1,886 million, and a net loss of $69 million for the year ended December 31, 2018 associated with the operating results of Federal-Mogul.

The following table summarizes, on a pro forma basis, the combined results of operations of the Company and Federal-Mogul business as though the Acquisition and the related financing had occurred as of January 1, 2017. The pro forma results are not necessarily indicative of either the actual consolidated results had the acquisition of Federal-Mogul occurred on January 1, 2017 or of future consolidated operating results. Actual operating results for the year ended December 31, 2020 and 2019 have been included in the table below for comparative purposes.


	Actual				Pro Forma (Unaudited)
	Year Ended December 31
	2020		2019		2018
Net sales and operating revenues	$	15,379	$	17,450	$	17,860
Earnings (loss) before income taxes and noncontrolling interests	$	(1,001)	$	(201)	$	488
Net income (loss) attributable to Tenneco Inc.	$	(1,521)	$	(334)	$	275
Basic earnings (loss) per share of common stock	$	(18.69)	$	(4.12)	$	3.41
Diluted earnings (loss) per share of common stock	$	(18.69)	$	(4.12)	$	3.40

These pro forma amounts have been calculated after applying the Company's accounting policies and the results presented above primarily reflect: (i) depreciation adjustments relating to fair value adjustments to property, plant, and equipment; (ii) amortization adjustments relating to fair value estimates of intangible assets; (iii) incremental interest expense, net on assumed indebtedness, the new credit facility, debt issuance costs, and fair value adjustments to debt; (iv) adjustment for loss to income available to common shareholders from noncontrolling interest tender offer; and (v) cost of goods sold adjustments relating to fair value adjustments to inventory. Pro forma adjustments described above have been tax affected using the Company's effective rate during the respective periods.

On March 3, 2017, and May 1, 2017, certain purported former stockholders of Federal-Mogul Holdings Corporation (“FMHC”) filed a petition in the Delaware Court of Chancery seeking an appraisal of the value of common stock they claim to have held at the time of the January 23, 2017 merger of IEH FM Holdings, LLC into FMHC. IEH FM Holdings, LLC was a wholly owned subsidiary of AEP and a subsidiary of IEP. The two cases were consolidated on May 10, 2017 into: “In re Appraisal of Federal-Mogul Holdings LLC, C.A. No. 2017-0158-AGB.”

Federal-Mogul received a capital contribution of $56 million on June 29, 2018 from its then-parent, IEP, in connection with this matter. At October 1, 2018, Federal-Mogul’s litigation reserve was $55 million, along with accrued interest of $6 million, which was assumed as part of the Federal-Mogul Acquisition. On October 19, 2018, the Company reached an agreement with the plaintiffs to settle their claims for $12.01 per share, inclusive of interest payable, or an aggregate of approximately $61 million. The Company paid this settlement in the fourth quarter of 2018.

The Company classifies assets and liabilities as held for sale (“disposal group”) when management, having the authority to approve the action, commits to a plan to sell the disposal group, the sale is probable within one year, and the disposal group is available for immediate sale in its present condition. The Company also considers whether an active program to locate a buyer has been initiated, whether the disposal group is marketed actively for sale at a price that is reasonable in relation to its current fair value, and whether actions required to complete the plan indicate it is unlikely significant changes to the plan will be made or the plan will be withdrawn.

As of December 31, 2020, the Company had approximately $15 million of property, plant, and equipment, primarily land and buildings, and non-core machinery and equipment across multiple segments that are expected to be sold in the next twelve months. The Company recognized a non-cash impairment charge of $1 million during the year ended December 31, 2020 resulting from recognizing the related assets as held for sale.

At December 31, 2019, the Company classified a non-core business in the Motorparts segment as held for sale. As of December 31, 2019, assets held for sale were $28 million and liabilities held for sale were $6 million. These related assets and liabilities were sold during the year ended December 31, 2020. See Divestitures below for additional information.


	December 31
	2020		2019
Assets:
Receivables	$	—	$	5
Inventories	—		8
Other current assets	—		1
Long-lived assets	15		18
Goodwill	—		4
Impairment on carrying value	—		(8)
Total assets held for sale	$	15	$	28
Liabilities:
Accounts payable	$	—	$	4
Accrued expenses and other current liabilities	—		2

Total liabilities held for sale	$	—	$	6

In the fourth quarter of 2020, the Company closed on the sale of a non-core business and its related assets for $15 million. The Company received $6 million of the purchase price at closing with the remaining to be received in installment payments through the fourth quarter of 2023. The Company recognized a non-cash impairment charge on the related assets of $1 million for the year ended December 31, 2020.

On March 1, 2019, in accordance with a stock and asset purchase agreement, the Company sold certain assets and liabilities related to a non-core business and received proceeds of $22 million, subject to customary working capital adjustments. During the year ended December 31, 2020, the Company received $3 million of proceeds due to the finalization of working capital adjustments.