Following the completion of the transaction, shareholders of Eaton Corp PLC will own at least 50.1% of the combined company.

Dana Inc has announced it has reached an agreement to integrate the vehicle mobility business of Eaton Corp PLC in a deal valued at $5.1 billion.

Deal Overview

Dana Inc has finalized a $5.1 billion transaction to combine with Eaton Corp PLC's vehicle mobility business, aiming to create a comprehensive, one-stop supplier of vehicle components.

Dana Inc stated it has signed a definitive agreement for the $5.1 billion merger with Eaton Corp PLC's vehicle mobility segment, with the goal of building a full-range parts supplier for both commercial and light passenger vehicle markets.

The two companies announced on Thursday that, upon closing the deal, Eaton Corp PLC shareholders will own a minimum of 50.1% of the combined entity, with Dana Inc shareholders holding approximately 49.9%. According to the transaction terms, Eaton Corp PLC will receive a cash distribution of about $1.1 billion, with the final amount subject to adjustments based on agreed terms.

This merger will combine Dana Inc's expertise in powertrain, thermal management, and sealing technologies with the commercial vehicle transmissions, engine exhaust treatment products, and advanced electrification technologies from Eaton Corp PLC's mobility business. The combined company is projected to have annual revenues of approximately $11 billion.

Dana Inc indicated that within two years of closing, the transaction is expected to generate $250 million in annualized run-rate cost synergies. These savings are anticipated to come from streamlining corporate structures, leveraging increased purchasing scale, optimizing manufacturing footprints, and enhancing research and engineering efficiencies.

In pre-market trading, shares of Dana Inc fell 7.1% to $32.94, while shares of Eaton Corp PLC rose 3.1% to $387.

Dana Inc disclosed that the transaction is structured as a Reverse Morris Trust and is expected to be completed in the first quarter of 2027.

The process for this structure involves Eaton Corp PLC first spinning off its vehicle mobility group and distributing it to its shareholders. Subsequently, Dana Inc will merge with a subsidiary of the vehicle mobility group, with the combined company operating as a wholly-owned subsidiary of the vehicle mobility group.

R. Bruce McDonald, Chairman of Dana Inc, will serve as Executive Chairman of the combined company, overseeing the integration process and realization of synergies. Byron Foster, the incoming Chief Executive Officer of Dana Inc, will become the CEO of the merged enterprise.

Foster stated, "This transaction is a pivotal milestone in Dana's transformation journey, positioning us to become a scaled, industry-leading provider of powertrain solutions."

Eaton Corp PLC stated that this spin-off and combination represents a significant step in its ongoing portfolio optimization strategy, which is expected to enhance the company's organic growth rate and operating margins post-separation.

Paul Ruiz, Chief Executive Officer of Eaton Corp PLC, said, "Moving forward, our remaining portfolio will be deeply aligned with the powerful, long-term secular growth trends in our core Electrical and Aerospace sectors."

The new, combined entity will continue to operate under the "Dana" brand and will maintain its listing on the New York Stock Exchange.