Racine-based Modine Manufacturing Co. will no longer sell the liquid-cooled portion of its automotive business to Ohio-based Dana Inc. after the two companies agreed to terminate the deal.
The deal, which called for Dana to acquire around 70% of Modine’s automotive business for $1 plus the assumption of $2.15 million in debt and pension liabilities, was expected to close in the first half of 2021 when it was announced in November 2020.
Instead, the companies said they had “actively engaged in the regulatory review process in Germany for many months and have decided that it is no longer in the best interest of either party to pursue the transaction further.”
Modine, which makes thermal management systems for a number of industries, was able to sell its air-cooled automotive business to Schmid Metall in a deal that closed April 30.
None of Modine’s automotive plants are in Wisconsin and a limited number of employees involved in the business work at its Racine headquarters.
The company has been looking at alternatives for its automotive business since January 2019, when it announced a strategic review. By May 2019, the company said it planned to move forward with a sale but by November 2019 said it had walked away from a potential deal. At that time, Modine had already spent $27 million preparing the business for sale.
Neil Brinker, president and chief executive officer of Modine, said the company planned for the possibility of the deal not closing over the past several months and had developed a robust plan to move forward.
“We are ready to make significant changes to this business, particularly in response to the lower production volumes resulting from the global semiconductor shortage,” Brinker said. “During the period that the business was held for sale, we were prohibited from taking actions to substantially change the business. Now that we have terminated the agreement, we can apply an 80/20 lens to this business and make the changes necessary to significantly reduce costs and improve operating margins. This includes focusing resources on the products where we have a sustainable competitive position and that support our profitability targets. We expect this new approach to be more financially beneficial to Modine and drive long-term value for our shareholders.”
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