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What Will Dana Gain From Its Combination With Eaton Mobility?
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Key Takeaways
Dana will combine with Eaton Mobility in a $5.1B deal, expanding its powertrain technology portfolio.
DAN raised 2030 targets to $14B-$15B revenues, ~18% adjusted EBITDA margin and 8-9% FCF margin.
Dana expects $250M annual synergies within two years and pro forma 2026 sales of about $11B.
Dana Incorporated (DAN - Free Report) has signed a definitive agreement with Eaton Corporation plc (ETN - Free Report) to combine with Eaton’s Mobility business in a transaction valued at approximately $5.1 billion. The deal brings together the companies’ complementary powertrain technologies, creating a larger supplier with a broader portfolio serving commercial and light vehicle manufacturers.
The transaction will be executed through a Reverse Morris Trust structure. Upon completion, Eaton shareholders will own at least 50.1% of the combined company, while Dana shareholders will hold about 49.9%. Eaton is also set to receive a cash distribution of roughly $1.1 billion, subject to customary adjustments.
Under the new leadership structure, Dana Chairman R. Bruce McDonald will become executive chairman, overseeing integration efforts and synergy execution, while Byron Foster will assume the role of chief executive officer beginning July 1, 2026. Timothy Kraus will remain Chief Financial Officer, and Eaton’s Erin Rowse will join as the chief human resources officer. The board will consist of Dana’s current directors, along with three Eaton-appointed members.
The combination will unite Dana’s powertrain, thermal management and sealing technologies with Eaton Mobility’s commercial vehicle transmission systems, engine and emissions products and electrification solutions. The resulting company aims to offer a more complete range of products across both original equipment and aftermarket channels.
According to CFO Timothy Kraus, the merger significantly improves Dana’s long-term growth outlook and supports higher 2030 financial targets. The company now expects to generate $14 billion to $15 billion in revenues by 2030, up from its previous goal of approximately $10 billion. It also projects adjusted EBITDA margins of around 18% and adjusted free cash flow margins of 8-9% compared with earlier targets of 14-15% and 6%, respectively.
Following the transaction, the combined business is expected to generate approximately $11 billion in pro forma 2026 sales. The company anticipates stronger profitability and cash flow, supported by an estimated $250 million in annual run-rate synergies within two years of closing. These savings are expected to come from procurement efficiencies, manufacturing optimization, lower structural costs and engineering collaboration.
Despite the $1.1 billion cash payment to Eaton, the combined entity expects to maintain a healthy balance sheet with net leverage of roughly 1.2x on a pro forma 2026 basis and intends to preserve Dana’s current credit rating.
The merged company will continue operating under the Dana Incorporated name and remain listed on the New York Stock Exchange. The transaction, unanimously approved by both companies’ boards, is expected to be tax-free for U.S. federal income tax purposes and is targeted to close in the first quarter of 2027, subject to shareholder approval, regulatory clearances and customary closing requirements.
Goldman Sachs is serving as Dana’s exclusive financial advisor, while Kirkland & Ellis is acting as legal counsel and Ernst & Young as transaction advisor. Goldman Sachs Bank USA is providing committed financing support for the deal.
The Zacks Consensus Estimate for GELHY’s 2026 sales and earnings implies year-over-year growth of 76.1% and 36.3%, respectively. The EPS estimate for 2026 and has improved 34 cents and 42 cents, respectively, over the past 60 days.
The Zacks Consensus Estimate for GTX’s 2026 sales and earnings implies year-over-year growth of 5.6% and 20.4%, respectively. The EPS estimate for 2026 has improved 14 cents over the past 60 days, while the EPS estimate for 2027 has improved 6 cents over the past 30 days.
View the Zacks #1 Rank List
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What Will Dana Gain From Its Combination With Eaton Mobility?
Key Takeaways
Dana Incorporated (DAN - Free Report) has signed a definitive agreement with Eaton Corporation plc (ETN - Free Report) to combine with Eaton’s Mobility business in a transaction valued at approximately $5.1 billion. The deal brings together the companies’ complementary powertrain technologies, creating a larger supplier with a broader portfolio serving commercial and light vehicle manufacturers.
The transaction will be executed through a Reverse Morris Trust structure. Upon completion, Eaton shareholders will own at least 50.1% of the combined company, while Dana shareholders will hold about 49.9%. Eaton is also set to receive a cash distribution of roughly $1.1 billion, subject to customary adjustments.
Under the new leadership structure, Dana Chairman R. Bruce McDonald will become executive chairman, overseeing integration efforts and synergy execution, while Byron Foster will assume the role of chief executive officer beginning July 1, 2026. Timothy Kraus will remain Chief Financial Officer, and Eaton’s Erin Rowse will join as the chief human resources officer. The board will consist of Dana’s current directors, along with three Eaton-appointed members.
The combination will unite Dana’s powertrain, thermal management and sealing technologies with Eaton Mobility’s commercial vehicle transmission systems, engine and emissions products and electrification solutions. The resulting company aims to offer a more complete range of products across both original equipment and aftermarket channels.
According to CFO Timothy Kraus, the merger significantly improves Dana’s long-term growth outlook and supports higher 2030 financial targets. The company now expects to generate $14 billion to $15 billion in revenues by 2030, up from its previous goal of approximately $10 billion. It also projects adjusted EBITDA margins of around 18% and adjusted free cash flow margins of 8-9% compared with earlier targets of 14-15% and 6%, respectively.
Following the transaction, the combined business is expected to generate approximately $11 billion in pro forma 2026 sales. The company anticipates stronger profitability and cash flow, supported by an estimated $250 million in annual run-rate synergies within two years of closing. These savings are expected to come from procurement efficiencies, manufacturing optimization, lower structural costs and engineering collaboration.
Despite the $1.1 billion cash payment to Eaton, the combined entity expects to maintain a healthy balance sheet with net leverage of roughly 1.2x on a pro forma 2026 basis and intends to preserve Dana’s current credit rating.
The merged company will continue operating under the Dana Incorporated name and remain listed on the New York Stock Exchange. The transaction, unanimously approved by both companies’ boards, is expected to be tax-free for U.S. federal income tax purposes and is targeted to close in the first quarter of 2027, subject to shareholder approval, regulatory clearances and customary closing requirements.
Goldman Sachs is serving as Dana’s exclusive financial advisor, while Kirkland & Ellis is acting as legal counsel and Ernst & Young as transaction advisor. Goldman Sachs Bank USA is providing committed financing support for the deal.
DAN Zacks Rank & Key Picks
Dana currently has a Zacks Rank #3 (Hold).
Some better-ranked stocks in the auto space are Geely Automobile Holdings Limited (GELHY - Free Report) and Garrett Motion Inc. (GTX - Free Report) , each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for GELHY’s 2026 sales and earnings implies year-over-year growth of 76.1% and 36.3%, respectively. The EPS estimate for 2026 and has improved 34 cents and 42 cents, respectively, over the past 60 days.
The Zacks Consensus Estimate for GTX’s 2026 sales and earnings implies year-over-year growth of 5.6% and 20.4%, respectively. The EPS estimate for 2026 has improved 14 cents over the past 60 days, while the EPS estimate for 2027 has improved 6 cents over the past 30 days.