Description of Business

9 Months Ended

Sep. 30, 2022

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Description of Business

1. Description of Business

Tenneco Inc. (“Tenneco” or “the Company”) was formed under the laws of Delaware in 1996. Tenneco designs, manufactures, markets, and distributes products and services for light vehicle, commercial truck, off-highway, industrial, motorsport, and aftermarket customers. Tenneco consists of four operating segments, Motorparts, Performance Solutions, Clean Air, and Powertrain and serves both original equipment (“OE”) manufacturers and the repair and replacement markets worldwide.

Proposed Merger

On February 22, 2022, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Pegasus Holdings III, LLC (“Parent”) and Pegasus Merger Co., a wholly owned subsidiary of Parent (“Merger Sub” and together with Parent, “Buyer”). Pursuant to the terms and conditions set forth in the Merger Agreement, Merger Sub will merge with and into Tenneco (the “Merger”) with Tenneco continuing as the surviving corporation of the Merger and as a wholly owned subsidiary of Parent. Parent and Merger Sub are affiliates of certain funds managed by affiliates of Apollo Global Management, Inc. At the effective time of the Merger (the “Effective Time”), each share of the Company’s Class A voting common stock that is issued and outstanding immediately prior to the Effective Time (other than shares to be cancelled pursuant to the Merger Agreement or shares of Class A voting common stock held by holders who have made a valid demand for appraisal in accordance with Section 262 of the Delaware General Corporation Law), will be automatically converted into the right to receive $20.00 in cash, without interest.

At the Effective Time, subject to the terms and conditions set forth in the Merger Agreement, each restricted share unit award (“RSU”) and each performance share unit award (“PSU”) of Tenneco that is outstanding immediately prior to the Effective Time will automatically be cancelled and converted into the holder’s right to receive a cash amount (subject to any applicable withholding taxes) calculated based on the per-share Merger consideration of $20.00.

The Company’s Board of Directors and the sole member or board of directors, as applicable, of Parent and Merger Sub have each unanimously approved the Merger and the Merger Agreement. On June 7, 2022, the Company’s stockholders approved the Merger and Merger Agreement. The closing of the Merger is subject to various conditions, including (i) the absence of any order, injunction or other legal or regulatory restraint making illegal, enjoining or otherwise prohibiting the closing of the Merger; (ii) the receipt of clearances and/or approvals under applicable foreign competition and/or other laws; (iii) the accuracy of the representations and warranties contained in the Merger Agreement, subject to customary materiality qualifications; and (iv) compliance with the covenants and agreements contained in the Merger Agreement as of the closing of the Merger. In addition, the obligation of Parent and Merger Sub to consummate the Merger is subject to the absence, since the date of the Merger Agreement, of a Company Material Adverse Effect (as defined in the Merger Agreement under clause (b) of such definition). The closing of the Merger is not subject to a financing condition, and Parent has obtained equity and debt financing commitments for the purpose of financing the Merger and the other transactions contemplated by the Merger Agreement.

All conditions to closing under the Merger Agreement with respect to antitrust and/or foreign direct investment laws have been satisfied or waived in accordance with the terms and conditions of the Merger Agreement. Parent, Merger Sub, and Tenneco expect to consummate the Merger in the middle of November 2022 promptly after the completion of certain debt financing activities by the Buyer and its debt financing sources that are contemplated by the Merger Agreement. Until the closing, the Company will continue to operate as an independent company.

The Company has incurred and will incur certain significant costs relating to the Merger, such as legal, accounting, financial advisory, printing and other professional services fees, as well as other customary payments.