Gentherm and Modine will combine ModineaEUR(TM)s Performance Technologies business with Gentherm in a Reverse Morris Trust transaction to expand GenthermaEUR(TM)s thermal management portfolio and engineering capabilities and pursue commercial opportunities across power generation, commercial vehicles, and heavyaEUR'duty equipment.

Gentherm (NASDAQ: THRM), a global market leader of innovative thermal management and pneumatic comfort technologies, and Modine (NYSE: MOD), a diversified global leader in thermal management technology and solutions, today announced that they have entered into a definitive agreement whereby Modine will spin-off and simultaneously combine its Performance Technologies business ("Modine Performance Technologies" or "SpinCo") with Gentherm in a Reverse Morris Trust (RMT) transaction that is intended to be tax-free for Modine and Modine shareholders for U.S. federal income tax purposes.

The transaction will establish Gentherm as a scaled leader in thermal management solutions and expand its technologies and capabilities in precision flow management. It will enable the combined company to serve attractive end markets including power generation; commercial, heavy-duty, and light vehicle; and medical. The combined company expects to realize significant value creation through cost synergies and incremental commercial opportunities including cross-selling, product integration, and entering new global markets. On a pro forma basis the combined company had revenue of $2.6 billion, with an adjusted EBITDA margin of 13% on a synergy-adjusted basis and net leverage of approximately 1.0x.2

Modine will retain its Climate Solutions businesses, creating a pure-play climate solutions company focused on the high-growth data center and commercial HVAC & refrigeration end markets. Modine will move forward with a streamlined business model and sharpened management focus on product innovation and high-growth, high-return initiatives, including organic and inorganic opportunities. The transaction provides Modine shareholders ownership in two focused businesses with stronger growth trajectories, enhanced competitive positioning, and greater potential to drive long-term value creation.

The transaction is valued at approximately $1.0 billion,1 representing a multiple of approximately 6.8x LTM (Sep.) 2025 post-synergy adjusted EBITDA of $147 million.3,4 Prior to the spin-off, Modine is expected to receive a cash distribution of $210 million from SpinCo, subject to adjustment, with Modine shareholders set to receive approximately 21 million shares of newly issued Gentherm common stock, representing an equity consideration of approximately $790 million.1 Following the transaction and without taking into account any overlapping shareholder ownership, Modine shareholders are expected to own approximately 40% of the combined company, and Gentherm shareholders are expected to own approximately 60% of the combined company, subject to adjustment. The Boards of Directors of Gentherm and Modine have unanimously approved the transaction.

Modine Performance Technologies is a leading provider of highly engineered, mission-critical thermal management solutions — using both air-cooled and liquid-cooled technologies — across the vehicular and power generation end markets. The business maintains long-standing relationships with blue-chip OEM and Tier 1 customers, served by a global footprint of 5,000 employees across 10 countries. It delivered annual revenue of approximately $1.1 billion and adjusted EBITDA of approximately $123 million.

Bill Presley, President and Chief Executive Officer of Gentherm, said: "This transaction accelerates the execution of our strategic framework with the combined company increasing its presence across multiple attractive end markets to drive profitable growth. Together, we will further scale our thermal management solutions and expand our technologies and capabilities in precision flow management, building on the global leadership of Modine Performance Technologies in the commercial vehicle, heavy-duty equipment, and fast-growing power generation end markets. The engineered solutions of Modine Performance Technologies are well aligned to our four core technology platforms – Thermal Management, Air Moving Devices, Pneumatic Solutions, and Valves – and we expect to create significant cross-selling opportunities and strengthen our ability to meet the rising demand for our combined, mission-critical offerings. We look forward to bringing together these two highly skilled teams with long histories of innovation, and a shared commitment to quality and a people-first culture."

Ron Hundzinski, Chair of Gentherm's Board of Directors, said: "Our Board is confident that the strong strategic fit, compelling transaction structure that preserves our balance sheet strength, and attractive financial position of the combined company will enable Gentherm to deliver significant long-term value for our shareholders and our customers."

Neil Brinker, President and Chief Executive Officer of Modine, said: "Combining Modine's Performance Technologies business with Gentherm establishes two stronger, more focused companies, each equipped to serve its end markets more effectively, accelerate growth, and drive long-term value for shareholders, customers, and employees. I believe Gentherm will be a perfect home for our great associates on the Performance Technologies team."

Brinker continued: "This is a significant next step for our remaining businesses as we continue to accelerate our transformation into a pure-play climate solutions company and evolve our portfolio toward high-growth markets. This transaction comes at an opportune time, allowing us to focus all of our resources on high-returning investments, including capacity expansions for data center cooling solutions to meet the rapidly growing demands of our hyperscale and colocation data center customers as well as targeted acquisitions to support other areas of the business. With regards to the data center market, our business has grown at an exponential rate and based on our current targets, we now anticipate 50% to 70% annual growth over the next two years, putting us on track to significantly exceed our previous $2 billion revenue goal for fiscal 2028."

Compelling Strategic and Financial Benefits to Gentherm's Combination with Modine Performance Technologies:

Accelerates Gentherm's strategic path by building scale in thermal management solutions and expanding its technologies and capabilities in precision flow management: The combination builds scale through a broader portfolio of thermal management solutions, expanded technology and engineering capabilities, and component-to-system integration synergies. Building on both companies' proven technology leadership, deep engineering expertise, and shared cultures of innovation, the combined company will be positioned to deliver differentiated solutions, enhance growth, and create long-term shareholder value.

 

Creates strong commercial opportunities across premium customer bases: The combined company will benefit from significant product cross-selling and integration opportunities given the complementary overlap between Gentherm's advanced product portfolio and technologies and Modine Performance Technologies' mission-critical engineered solutions. Gentherm expects to accelerate the adoption of its proven products and solutions across Modine Performance Technologies' blue-chip customer base where it has deep long-term relationships.

 

Establishes stronger foundation for continued growth: This transaction strengthens Gentherm's foundation with more balanced end-market exposure and ample opportunities for future growth. The combined company generated approximately one-third of pro forma revenue from end markets outside of light vehicles.

 

Benefits from shared focus on operational excellence: The combined company will bring together Gentherm's culture of operational excellence with Modine Performance Technologies' well-established operating system, creating a strong foundation for continuous improvement. Together, the combined company will further enhance scalability, efficiency, and quality, supporting attractive margin expansion and reinforcing a durable competitive advantage over the long-term.

 

Delivers ~$25 million in identified annual cost synergies: The combined company expects the transaction to generate approximately $25 million of annual synergies through cost optimization and operational efficiencies. It also expects to realize significant additional value creation through incremental commercial opportunities including cross-selling, product integration, and entrance into new global markets, providing a clear path to mid-teens adjusted EBITDA margin.

 

Generates a compelling financial profile with flexibility for future investments: The combined company generated pro forma revenue of $2.6 billion, with an adjusted EBITDA margin of 13% on a synergy-adjusted basis.2 The RMT structure preserves Gentherm's strong balance sheet, with pro forma net leverage ratio of approximately 1.0x. This strong cash flow generation and modest financial leverage will allow the combined company to maintain capital allocation flexibility, and the transaction is expected to be accretive to adjusted EPS by year two.

 

Compelling Strategic and Financial Benefits to Modine:

Accelerates Modine's transformation into a pure-play climate innovation leader: The transaction sharpens Modine's focus on high-growth, high-margin end markets. As a pure-play climate solutions company and building on its long-standing leadership in thermal technologies, Modine will be better positioned to expand product development and innovation to support next generation solutions, especially in the rapidly growing data center cooling end market.

 

Delivers a strong financial profile: For the twelve months ended September?30,?2025, the Climate Solutions segment generated $1.6?billion in revenue, with expectations to approach $2?billion for Fiscal 2026, driven by robust organic growth in Data Centers and recent HVAC Technologies acquisitions. The segment maintains attractive profitability, with 19.6% adjusted EBITDA margin — equating to $307?million in adjusted EBITDA. Meaningful growth in revenue and EBITDA is anticipated for the Climate Solutions segment in Fiscal?2026, providing a solid foundation for future expansion.5

 

Streamlines Modine's business model and optimizes capital allocation: The transaction enables Modine to prioritize compelling organic and inorganic growth opportunities across attractive end markets. It allows for redeployment of resources toward high-return initiatives in data center cooling, commercial HVAC and refrigeration technologies. With sharper focus on innovation, organic growth, and targeted M&A, Modine will continue to refine its portfolio and compound long-term shareholder value.

 

Strengthens Modine's balance sheet: Modine will use the cash distribution of $210 million from SpinCo, subject to adjustment, to reduce debt, driving a pro forma net leverage ratio expected to be below?1.0x. This enhanced financial flexibility will support future investments in strategic markets and core product platforms.

 

Creates significant upside for Modine shareholders: Shareholders will own 100% of Modine's high-performing, pure-play climate solutions business and 40%, subject to adjustment, of the combined Gentherm and Modine Performance Technologies platform, a leading provider of thermal management solutions and precision flow management across multiple attractive end markets. This tax-free structure provides ownership in two focused businesses with stronger growth trajectories, enhanced competitive positioning, and greater potential to drive long-term value creation.

Transaction Details

The RMT transaction is expected to close in the fourth quarter of calendar year 2026 subject to receipt of Gentherm shareholder approval, the completion of SpinCo financing, a customary IRS tax ruling, and customary closing conditions, including required regulatory approvals and certain tax opinions.

Bill Presley and Jon Douyard will lead the combined company as CEO and CFO, respectively. Jeremy Patten will continue as President of Modine Performance Technologies, which is expected to operate as a division of Gentherm. Modine Performance Technologies will retain its brand name, which Gentherm will acquire as part of the transaction. Gentherm's Board of Directors will be expanded with the addition of two Board nominees designated by Modine in consultation with the Gentherm Board.

The combined company will continue to operate under the Gentherm name and retain its listing on the NASDAQ stock exchange under the ticker symbol THRM. The combined company will remain headquartered in Novi, Michigan, and will retain a significant presence in Modine Performance Technologies' current locations, including its Racine Technical Center.

Modine will continue to be led by Neil Brinker and Michael Lucareli as CEO and CFO, respectively, and the current Board of Directors. The stock will continue to trade on the NYSE. Upon closing of the transaction, Gentherm and Modine will provide additional information regarding any potential changes in the company names, branding, and/or market trading information.

Investor Calls

Gentherm will host a conference call today, January 29 at 8:00 AM ET.

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