Tenneco Set to Buy Öhlins for $160 Million

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Interesting news today on the business front of the powersports industry, as Tenneco Inc. announced its intention to purchase Öhlins Racing A.B. for $160 million.

The move would see Tenneco own a majority stake in Öhlins, while a minority position in the company would remain with founder and namesake Kenth Öhlin.

The move is an interesting one since Tenneco has been in the suspension business before, owning the Marzocchi suspension brand.

Shutting down Marzocchi in mid-2015, Tenneco would later sell the Italian suspension company six months later to VRM, an Italian automotive company.

With Öhlins though, Tenneco aims to be an industry leader, and the American firm seems most interested in the technological areas that Öhlins is innovating in, namely its electronically controlled and semi-active suspension units.

“Tenneco’s 20 year relationship with Öhlins has delivered world class products in the intelligent suspension market and provides a strategic entry into advanced performance communities with premium branded products and proprietary Continuously Controlled Electronic Suspension Valve (CES) technology.” said Brian Kesseler, co-CEO, Tenneco.

“Öhlins’ technology team will allow us to rapidly grow our product offerings for current and future customers, as well as help us win a larger share of business in developing mobility markets. I am delighted to welcome the Öhlins team as an important part of our new Aftermarket and Ride Performance company.”

The deal sees Tenneco paying what many will consider a premium for the Swedish company, as Öhlins made roughly $130 million in revenue over the past 12 months of business operations. With the $160 million purchase price, this pegs that deal at over a 1.2x revenue multiple, significantly higher than the 0.9x multiple we usually see in the manufacturing space.

This margin is surely attributable to Öhlins’ work in “intelligent” suspension products, as the Swedish brand has lead the industry with its semi-active forks and shocks. The standard on the race track, Öhlins has cornered the market when it comes to two-wheeled racing, and continues to make gains into other forms of competition.

With 340 employees at its R&D facility in Sweden, Öhlins also has branches and subsidiaries worldwide: Auto Norden and Öhlins CES in Sweden, Öhlins Asia in Thailand, Öhlins Distribution/Technical Centre in Germany, Öhlins USA in North Carolina.

This acquisition deal is expected to close in the first quarter of 2019, as it is subject to regulatory approval and other customer closing conditions. It is important to note that Öhlins founder Kenth Öhlin will continue with the company, where he will provide continuity in his strategic and technological vision.

Source: Tenneco