Racine-based Modine Manufacturing Co. plans to sell the liquid-cooled portion of its automotive business to Dana Inc. for $1.
Dana also agreed to assume certain financial liabilities, including $2 million in debt and a $15 million unfunded pension liability.
In exchange, the Ohio-based company will acquire around 70% of Modine’s automotive business, representing around $300 million in sales in 2019.
The deal is expected to close in the first half of 2021.
“This transaction accelerates Modine’s transformation to become a diversified industrial company with higher operating margins, lower capital intensity and greater free cash flow generation,” said Mick Lucareli, interim chief executive officer of Modine. “The enhanced operating profile resulting from this transaction is a critical component of our strategic objectives and will allow us to provide additional capital and resources to accelerate the growth of our commercial HVAC and data center businesses.”
Modine has been exploring alternatives for its automotive business for nearly two years. None of the company’s automotive plants are in Wisconsin and a limited number of employees involved in the business work at its Racine headquarters.
The company initially announced a review of the segment, which accounted for around 25% of sales, in January 2019.
By May 2019, Modine said it planned to move forward with a sale but in November said it had walked away from potential deal. At the time, the company had spent $27 million preparing the business for sale.
In August, Lucareli acknowledged the sale had taken longer than anticipated, including delays caused by the COVID-19 pandemic. He added the company had reengaged with parties interested in a deal before the pandemic.
“Dana’s in-house engineering and manufacturing of thermal-management technologies is an important differentiator, and this acquisition is synergistic to our current portfolio, making it a natural fit for our Power Technologies business,” said James Kamsickas, chairman and CEO of Dana. “In addition to strengthening relationships with core customers in Europe and Asia, it presents opportunities to leverage our scale to expand business with new mobility manufacturers and optimize the business to deliver significant value to our shareholders.”