Adds analyst commentary in paragraph 8, updates shares

By Anshuman Tripathy

June 11 (Reuters) - Dana DAN.N will combine with Eaton's ETN.N mobility business in a deal valuing the unit at about $5.1 billion, the companies said on Thursday, as the auto parts supplier looks to tap into resilient aftermarket demand.

Shares of Dana were down about 12.5%, while those of Eaton rose 2% in afternoon trading.

Eaton shareholders will own at least 50.1% while Dana shareholders will own about 49.9% of the combined company at close, expected in the first quarter of 2027.

The deal would value the combined company, which will operate as Dana Inc, at more than $10 billion in enterprise value.

Dana said the new entity is expected to achieve $250 million of run-rate cost synergies within 24 months of closing.

Demand for replacement auto parts has stayed robust as U.S. buyers, squeezed by inflation and rising new-car prices, hold onto their vehicles longer.

The industry is also navigating cost pressures from tariffs and an uncertain electric vehicles market, as automakers delay or scale back their EV plans.

"The market still underestimates the earnings power of the 'new' Eaton, without mobility and with its four recent high growth/margin acquisitions," said Bernstein analyst Chad Dillard.

Eaton said earlier this year it was planning to spin off its underperforming automotive businesses, which make technologies that manage and distribute power across vehicle propulsion systems.

Byron Foster, who will join as Dana CEO on July 1, and current CFO Timothy Kraus will continue to reprise their respective roles in the merged company.

The move will allow Dublin, Ireland-based Eaton, a supplier of electrical components and wiring, to focus its portfolio on electrical and aerospace businesses in data centers, aerospace aftermarket and defense.