Dana to Combine with Eaton's Mobility Business in $5.1B Reverse Morris Trust Transaction
Summary
Dana Incorporated announced a definitive agreement to combine with Eaton's Vehicle and eMobility business in a $5.1 billion Reverse Morris Trust transaction, leading to a new combined entity where Eaton shareholders will hold a majority stake.
Key Events
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Definitive Merger Agreement
Dana Incorporated has entered into definitive agreements to combine with Eaton's Vehicle and eMobility business segments via a Reverse Morris Trust transaction.
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Transaction Structure & Ownership
Dana will merge with a subsidiary of a new entity (SpinCo), which will then be renamed Dana Incorporated. Former Eaton shareholders will own at least 50.1% of the combined company, and former Dana shareholders will own approximately 49.9%.
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Financial Terms
SpinCo will make a cash payment of approximately $1.1 billion to Eaton Ohio, funded by a $2.6 billion bridge loan facility that also covers refinancing existing Dana debt.
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Tax-Free Intent
The transaction is intended to be tax-free to Dana and Eaton shareholders for U.S. federal income tax purposes.
Analysis
Dana Incorporated has entered into a definitive agreement to combine with Eaton's Vehicle and eMobility business segments through a Reverse Morris Trust transaction. This is a transformational event for Dana, as it will merge into a newly formed entity (SpinCo) that will then be renamed Dana Incorporated. Post-merger, former Eaton shareholders will own at least 50.1% of the combined company, while existing Dana shareholders will own approximately 49.9%. The transaction involves a cash payment of approximately $1.1 billion from SpinCo to Eaton Ohio, which will be funded by a $2.6 billion bridge loan facility that also covers the refinancing of certain existing Dana indebtedness. The deal is unanimously approved by both company boards and is intended to be tax-free for U.S. federal income tax purposes for shareholders, pending regulatory and shareholder approvals. A termination fee of $158.7 million is payable by Dana to Eaton under certain circumstances.
At the time of this filing, DAN was trading at $30.21 on NYSE in the Manufacturing sector, with a market capitalization of approximately $3.3B. The 52-week trading range was $15.31 to $39.56. This filing was assessed with positive market sentiment and an importance score of 10 out of 10.