Apollo negotiated Russia, Ukraine carve-out in $7.1 billion Tenneco deal

Tsakos Energy Navigation

28/02/2022 21:19

By Krystal Hu
    Feb 28 (Reuters) - Apollo Global Management Inc  APO.N 
negotiated a carve-out earlier this month in its agreement to
acquire auto parts maker Tenneco Inc  TEN.N  for $7.1 billion,
including debt, that allows it to sidestep regulatory approval
from Russia and Ukraine, a regulatory filing shows.
    Apollo, a manager of alternative assets such as private
equity and corporate credit, can unilaterally remove Russia and
Ukraine from the list of required jurisdictions that must clear
the deal with Tenneco, the filing shows. 
    Had Apollo not secured this exception, it would have had to
pay Tenneco a $108 million break-up fee in the event that Russia
or Ukraine objected to the deal, according to the filing. 
    Lake Forest, Illinois-based Tenneco has a manufacturing
presence in Russia, according to its latest annual report.
Russia contributed $100 million to the $15.4 billion annual
revenue the company posted in 2020, and Tenneco does not own
hard assets in Ukraine, according to a source familiar with the
matter.
    Apollo and Tenneco did not respond to requests for comment.
    The deal is one of the first to include provisions relating
to the conflict between Russia and Ukraine. The acquisition was
announced on Feb. 23, one day before Russia launched what it
called a special military operation against Ukraine that has led
to hundreds of casualties and has rattled global financial
markets.
    Investors are ascribing a high probability to Apollo's
acquisition of Tenneco being completed. Tenneco shares hovered 
around $19.23 on Monday, very close to the $20 per share deal
price.

 (Reporting by Krystal Hu in Beijing
Editing by Matthew Lewis)
 ((Krystal.Hu@thomsonreuters.com;))