Modine Manufacturing Company (MOD) M&A announcement summary

Deal rationale and strategic fit

• Accelerates transformation into a pure-play climate solutions company focused on high-growth, high-margin markets.

• Enables sharper focus on data center cooling and HVAC technologies, leveraging industry megatrends in high-density computing and indoor air quality.

• Establishes a scaled leader in thermal management with expanded technologies and capabilities, enhancing presence in power generation, commercial vehicles, and heavy-duty equipment.

• Reduces exposure to light vehicles, creating a more balanced and resilient business.

• Shareholders retain upside in both entities, with 40% ownership in the combined company and 100% in the new entity.

Financial terms and conditions

• Transaction structured as a Reverse Morris Trust, intended to be tax-free for shareholders.

• Performance Technologies valued at ~$1 billion, or 6.8x trailing twelve-month Adjusted EBITDA as of September 2025.

• Modine shareholders to receive ~$210 million in cash and ~$790 million in Gentherm stock, equating to ~21 million shares and 40% ownership of the combined company.

• Pro forma net leverage of the merged company is expected to be ~1.0x, and the deal is EPS accretive by year 2.

• Expected closing in Q4 2026, pending Gentherm shareholder approval and regulatory clearances.

Synergies and expected cost savings

• Identified ~$25 million in annual cost synergies through operational efficiencies and cost optimization.

• Significant synergies anticipated for Modine shareholders through combined operations and past portfolio realignment.

• Additional value expected from cross-selling, product integration, and entry into new global markets.

• No significant stranded costs anticipated; corporate expenses expected to remain flat and absorbed by growth.

• Some one-time deal costs expected, but not material.