Tenneco will then separate the combined companies into two separate stocks in a tax-free spinoff, one focusing on "aftermarket and ride performance," the other on "powertrain technology."
"We expect to be meaningful stockholders of Tenneco going forward and are excited about the prospects for additional value creation," Icahn said in a statement. "This transaction is an excellent example of our general modus operandi at Icahn Enterprises, by which we seek to acquire undervalued assets, nurture, guide and improve their condition and operations, and ultimately develop them into more valuable businesses, which greatly enhances value for all shareholders."
Icahn acquired control of Federal Mogul, a maker of wiper blades and spark plugs, in 2008. The activist investor then took it private in January 2017.
Tenneco shares jumped more than 6 percent in premarket trading Tuesday.
The sale to Icahn, made up of $800 million in cash and 29.5 million shares of Tenneco stock, is expected to close in the second half of the year.