Intelligent power management company Eaton (NYSE:ETN) today announced the next step in Eaton's ongoing portfolio transformation. Eaton entered into a definitive agreement with Dana Incorporated (NYSE:DAN) under which Eaton will separate and combine its Mobility Group with Dana in a Reverse Morris Trust (RMT) transaction creating a combined company valued at over $10 billion.

The separation of the Mobility Group marks the next step in Eaton's ongoing portfolio transformation and positions Eaton to execute on the Company's 2030 growth strategy. Upon closing of the transaction, Eaton will operate a more focused portfolio concentrated on its Electrical and Aerospace businesses, which are directly aligned to secular growth themes in electrification, digitalization, AI-driven data center buildout, infrastructure modernization, aerospace aftermarket, and defense spending. The recent acquisitions of Ultra PCS and Boyd Thermal further strengthen the Company's strategic positioning, extending Eaton's capabilities in aerospace electronic controls and liquid cooling for data centers.

The separation is expected to be immediately accretive to Eaton's organic growth rate and operating margins upon closing. Eaton expects to deploy the approximately $1.1 billion cash distribution from the transaction consistent with its existing capital allocation framework and priorities, including repayment of outstanding indebtedness.

Paulo Ruiz, Eaton chief executive officer, said, "We are pleased to have reached this agreement, which delivers significant value to Eaton and its shareholders, and represents a major milestone in Eaton's 2030 growth strategy to lead, invest, and execute for growth. Eaton shareholders will benefit from the meaningful upside created by the combined company, and the transaction will provide substantial cash value for Eaton to deploy to our highest-growth and highest-margin opportunities. Looking ahead, our portfolio will be closely aligned with the powerful megatrends driving generational growth in our Electrical and Aerospace businesses, and we look forward to continuing our momentum to drive meaningful value for our customers and shareholders."

Benefits of Combining Mobility Group and Dana

The combined Mobility Group and Dana will be a scaled, global engineered solutions partner, well-positioned to serve commercial vehicle and light vehicle OEMs worldwide. Together, the combined company will offer a comprehensive and complementary portfolio of drivetrain, propulsion, electrification, and power management solutions spanning internal combustion, hybrid, and fully electric platforms to commercial vehicle and automotive OEMs, supported by comprehensive technology capabilities and best in class manufacturing capabilities. The combined company expects to generate approximately $11 billion in pro forma revenue and $1.7 billion in pro forma estimated 2026 adjusted EBITDA (including run-rate synergies, which are expected to be fully realized within 24 months following closing).

The combined company will benefit from increased scale, $250 million of run-rate cost synergies, and greater diversification across customers, geographies, and end markets. It will also have an expanded aftermarket presence, which is expected to deliver more resilient revenue streams across economic cycles.

Mr. Ruiz continued, "Combining the Mobility Group with Dana creates a strong company that will be well-positioned to serve customers and support employees over the long term. We are proud of our mobility team and what they have built and are confident the combination of talent, capabilities, and technologies will create meaningful value for shareholders, customers, and employees alike."

R. Bruce McDonald, Dana Chairman and Chief Executive Officer, stated, "We are excited to bring together Eaton's Mobility Group with Dana. The addition of Mobility Group's leading positions in commercial vehicle transmissions, clutches, and power management technologies, combined with Dana's strengths in axles, driveshafts, electrification, thermal management, and sealing products, will create a truly differentiated global platform. Together, we will be better positioned to serve our customers, invest in innovation, and drive long-term value creation for shareholders of the combined company."

Transaction Details

The transaction values Eaton's Mobility Group at approximately $5.1 billion. This represents a multiple of 8.3x 2026 estimated pro forma adjusted EBITDA, or 5.9x on a fully synergized basis, including $250 million of run-rate synergies. Eaton shareholders will receive newly issued shares of the combined company such that Eaton shareholders will own at least 50.1% of the combined company's outstanding shares following the consummation of the transaction. The agreement follows Eaton's previously announced intent to separate its Mobility Group into an independent, publicly traded company.

The transaction is structured as a "Reverse Morris Trust" transaction, where Eaton will first separate its Mobility Group to Eaton shareholders through either an exchange offer (split-off) or a pro rata distribution (spin-off), at Eaton's election. Immediately thereafter, Dana will merge with a subsidiary of the Mobility Group, with Dana surviving as a wholly owned subsidiary of the Mobility Group. In the event of a split-off, Eaton shareholders would have the opportunity to tender their Eaton shares in exchange for shares of the Mobility subsidiary. In the event of a spin-off, all Eaton shareholders would receive shares of the Mobility subsidiary on a pro rata basis. Eaton will also receive a cash distribution of $1.1 billion prior to completion of the transaction, subject to adjustment for cash and indebtedness, which will be funded by newly-issued debt of the Mobility Group. The transaction is intended to be tax-free for U.S. federal income tax purposes to Eaton and Eaton's shareholders.

The agreement was unanimously approved by the Eaton board of directors following a comprehensive evaluation of strategic alternatives for its Mobility Group. The agreement was also unanimously approved by the Dana board of directors.

The transaction is expected to close in the first quarter of 2027, subject to receipt of Dana shareholder approval, receipt of required regulatory clearances, and customary closing conditions.

Byron Foster, Dana's incoming Chief Executive Officer, and Timothy Kraus, Dana's current Chief Financial Officer, will lead the combined company as CEO and CFO, respectively. Erin Rowse, Eaton's current Senior Vice President Human Resources, Industrial, will serve as the combined company's Chief Human Resources Officer upon close. The combined company's senior management team will include representatives from both companies and will be announced as integration planning progresses. R. Bruce McDonald, Dana's current Chairman and Chief Executive Officer, will serve as Executive Chairman of the combined company. Dana's eight-member board of directors will be expanded to include three additional directors designated by Eaton, including one current Eaton executive and two current Eaton directors.

The combined company will operate as Dana Incorporated and will continue to be listed on the NYSE under the ticker symbol DAN.

In a separate press release and presentation issued today, Dana provided additional details regarding the combination.