Ohio: Dana Incorporated on Thursday announced it has entered into a definitive agreement with Eaton Corporation plc to combine with Eaton’s Mobility business in a transaction valued at approximately $5.1 billion, representing approximately 8.3x estimated 2026 pro forma adjusted EBITDA before synergies, or approximately 5.9x including run-rate synergies. The transaction combines two highly complementary powertrain portfolios to create a comprehensive, differentiated leader in commercial and light vehicle markets.
The transaction is structured as a Reverse Morris Trust with Eaton shareholders owning at least 50.1% and Dana shareholders owning approximately 49.9% of the combined company at close. Under the terms of the agreement, Eaton will receive a cash distribution of approximately $1.1 billion (subject to adjustments for cash and indebtedness).
Dana’s Chairman, R. Bruce McDonald, will serve as Executive Chairman of the combined company with responsibility for integration and synergy realization, and Byron Foster will serve as Chief Executive Officer, with both assuming their roles on July 1, 2026. Timothy Kraus will continue as Chief Financial Officer, and Eaton’s Erin Rowse, Senior Vice President Human Resources, Industrial, will serve as Chief Human Resources Officer at closing. The broader leadership team will include executives from both organizations. The combined company’s Board of Directors will be comprised of all the members of Dana’s Board of Directors and three Eaton designees.
The combination will integrate Dana’s global powertrain, thermal, and sealing technologies with Eaton Mobility’s commercial vehicle transmissions, engine and emissions products, and advanced electrification capabilities, creating a more comprehensive supplier serving commercial and light vehicle markets, as well as the associated aftermarket channels.
“This transaction marks an important milestone in our transformation and positions Dana as a leading, scaled provider of powertrain solutions,” said Byron Foster, Dana’s incoming Chief Executive Officer. “By expanding our presence in core markets with new products and complementary technologies, we are enhancing our ability to deliver greater value to customers while strengthening margins through a more balanced portfolio and meaningful synergies. Importantly, we are bringing together highly skilled and dedicated teams whose expertise will drive our future success. This combination further accelerates the execution and expands the scope of our Dana 2030 strategy by increasing scale, deepening our aftermarket capabilities, and advancing both our traditional and electrification technologies.”
Paulo Ruiz, Eaton Chief Executive Officer, said, “We are pleased to have reached this agreement, which delivers significant value to Eaton and its shareholders, further aligns our existing portfolio with powerful megatrends and supports Eaton’s 2030 growth strategy to lead, invest, and execute for growth. Together, Eaton Mobility and Dana will create a leading and global engineering solutions partner, well positioned to serve commercial vehicle and light vehicle markets worldwide. We are incredibly proud of the reputation and credibility that our Eaton Mobility team has built, and we are confident that this highly complementary combination will drive meaningful value for customers, employees and shareholders alike.”
“This transaction meaningfully enhances our long-term financial outlook and enables us to significantly increase our Dana 2030 targets,” said Timothy Kraus, Dana’s Chief Financial Officer. “Our prior targets included approximately $10 billion in sales, 14% to 15% adjusted EBITDA margins, and a 6% adjusted free cash flow margin. With the addition of Eaton Mobility, we are now targeting $14 to $15 billion in sales, approximately 18% adjusted EBITDA margins, and an 8%-9% adjusted free cash flow margin by 2030. Importantly, after funding the approximately $1.1 billion cash distribution to Eaton, we expect to maintain a strong balance sheet with approximately 1.2x net leverage on a pro forma 2026 estimated basis, supporting continued investment and disciplined capital allocation.”
Following closing, Dana is expected to operate with expanded global scale, higher margins, broader customer coverage, and a more complete portfolio spanning mechanical systems and electrified power delivery solutions. The combined company strengthens OEM relationships across commercial and light vehicle markets, and related aftermarkets.
The transaction, which has been unanimously approved by the Boards of both companies, is structured as a “Reverse Morris Trust” transaction, where Eaton will first separate its Mobility Group to Eaton shareholders through either an exchange offer (split-off) or a pro rata distribution (spin-off), at Eaton’s election. Immediately thereafter, Dana will merge with a subsidiary of the Mobility Group, with Dana surviving as a wholly owned subsidiary of the Mobility Group. Upon close of the transaction, existing Eaton shareholders will own at least 50.1% of the shares of the combined company.
The transaction values Eaton Mobility at $5.1 billion on a cash-free, debt-free basis, representing approximately 5.9x fully synergized estimated 2026 pro forma adjusted EBITDA. In connection with the transaction, Eaton is expected to receive a cash distribution of approximately $1.1 billion (subject to adjustments for cash and indebtedness), funded through new debt raised prior to closing.
The combination creates a company with approximately $11 billion in sales on a pro forma 2026 estimated basis. The significantly enhanced financial profile includes improved margins and free cash flow supported by cost synergies and a stronger mix of aftermarket and higher-margin product offerings.
The transaction is expected to deliver $250 million in annual run-rate synergies within 24 months following closing, driven by reduced structural costs, purchasing scale, manufacturing optimization, and engineering efficiencies.
Following completion of the transaction, the combined company is expected to maintain a strong balance sheet with net leverage of approximately 1.2x on a fully synergized pro forma 2026 estimated basis, and Dana is expected to maintain its current credit rating.
The combined company will continue to operate under the Dana Incorporated name and retain its listing on the New York Stock Exchange.
The transaction is expected to be tax-free to Dana and Eaton shareholders for U.S. federal income tax purposes and is expected to close in the first quarter of 2027, subject to approval by Dana shareholders, receipt of regulatory approvals, and other customary closing conditions.
