Tenneco to Sell Auto Parts Division to Focus on Packaging

Tenneco Inc. has announced it is talking with potential buyers to sell its auto parts division for at least $4 billion so it can focus on its faster-growing packaging business.

The company has declined to name the potential buyers. Tenneco said it hopes to announce the sale or spinoff of the Lake Forest, IL-based division, which makes Walker mufflers and Monroe shock absorbers, by the end of the first quarter. Greenwich, CT-based Tenneco, the third-largest U.S. packaging company, announced in July that it would consider separating its auto parts business to help lift its sinking shares — its stock has fallen about 34% in the past year. The company said it would then take six months to a year to decide how to split off the business.

"We continue to explore the range of those options," said Neil Geary, a company spokesman.

Some analysts have estimated that if Tenneco were broken up, its shares could be worth between $40 and $45. Shares climbed $1, or 3.6%, to $28.75 on Monday following the company's announcement.

Tenneco has shed several businesses over the past few years to become more focused and take advantage of the faster growth of its packaging business. Its packaging revenues jumped 9.3% to $4.3 billion in 1998, compared to its auto parts sales, which rose less than 1% to $3.24 billion.

Last month, Tenneco sold a majority stake in its containerboard unit for $2.2 billion to pay down debt. In 1996, the company sold or spun off its farm equipment, shipbuilding and gas-transmission businesses.

Any sale or spinoff could result in job cuts. Tenneco has already cut about 1,000 of its 50,000 jobs worldwide since July. Tenneco employs about 900 workers in Lake Forest — 650 at Tenneco packaging and 250 in automotive. That's down from about 800 and 300 respectively, in July.