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Icahn’s Federal-Mogul bid likely part of profit plan

Steve Wybo was quoted in Crain’s Detroit Business. To read the entire article, please click here.

“‘This looks like a backward vertical integration play,’ said Steve Wybo, senior managing director for Birmingham-based advisory firm Conway MacKenzie Inc. ‘Federal-Mogul has strong (aftermarket) brands. If we’re going into a recession, or (auto) sales slow down, we’re going to have aging vehicles that are going to need aftermarket parts.’

“However, questions remain over what Icahn would do with its powertrain division once the company goes private under his full control. The same looming auto sales recession that would benefit the aftermarket unit would plague Federal-Mogul’s powertrain division.

“Wybo said Icahn is likely to ditch the division in a fire sale or a small public offering.

“‘There’s no impressive revenue growth, and he probably has a liquidation or sale in mind for that business,’ Wybo said. ‘If I’m him, I’d say ‘it’s time to get rid of this dog that I’ve owned for too long.’?’

“But the supplier hasn’t kept pace with the rest of the industry, Wybo said.

“‘There’s no impressive revenue growth in what’s been record years for the auto industry,’ Wybo said. ‘They’ve only grown around 15 percent (revenue) since the recession. That’s just not enough. I suspect in six months we’ll see a different owner for that business. Icahn is probably fatigued from the thing.'”