Gentherm and Modine Enter $1 Billion Transaction
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 1d ago
0mins
Gentherm (THRM) and Modine (MOD) announced that they have entered into a definitive agreement whereby Modine will spin-off and simultaneously combine its Performance Technologies business with Gentherm in a Reverse Morris Trust transaction that is intended to be tax-free for Modine and Modine shareholders for U.S. federal income tax purposes. The transaction is valued at approximately $1.0 billion, representing a multiple of approximately 6.8x LTM 2025 post-synergy adjusted EBITDA of $147 million. 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. 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.
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Analyst Views on THRM
Wall Street analysts forecast THRM stock price to rise over the next 12 months. According to Wall Street analysts, the average 1-year price target for THRM is 43.33 USD with a low forecast of 42.00 USD and a high forecast of 44.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
4 Analyst Rating
2 Buy
2 Hold
0 Sell
Moderate Buy
Current: 35.840
Low
42.00
Averages
43.33
High
44.00
Current: 35.840
Low
42.00
Averages
43.33
High
44.00
About THRM
Gentherm Incorporated is a provider of thermal management and pneumatic comfort technologies. The Company operates in two segments: Automotive and Medical. The Automotive reporting segment comprises global automotive businesses, including the design, development, manufacturing and sales of its automotive climate and comfort solutions (including Climate Control Seats, Climate Control Interiors, lumbar and massage comfort solutions and electronic solutions for climate and comfort technologies), valve system solutions and other automotive products. The Medical reporting segment comprises the patient temperature management business in the medical industry. Patient temperature management includes temperature management systems across multiple product categories addressing the needs of hyper-hypothermia therapy in intensive care, normothermia in surgical procedures and additional warming/cooling therapies utilized in acute and chronic care departments and non-hospital facilities.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Modine Sells Performance Tech to Gentherm for ~$1B, Stock Surges
- Transaction Size: Modine announced the sale of its performance technologies business to Gentherm for approximately $1 billion, representing a valuation of about 6.8 times the adjusted EBITDA for 2025, indicating strong market recognition of its assets.
- Shareholder Benefits: Before the transaction closes, Modine is set to receive a cash distribution of $210 million, while shareholders will receive around 21 million shares of newly issued Gentherm common stock, allowing them to hold approximately 40% of the combined company, enhancing long-term shareholder value.
- Synergy Potential: The combined company is projected to have revenue of $2.6 billion and an adjusted EBITDA margin of 13%, with expected annual synergies of $25 million through cost optimization and operational efficiencies, significantly improving overall financial performance.
- Strategic Implications: Analysts view this transaction as a positive strategic move; while the sale of the entire engine business was unexpected, it does not negatively impact Modine's long-term prospects and may strengthen its focus on climate solutions.
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Modine and Gentherm Merger Overview
- Cash Distribution Expectation: Modine is expected to receive a cash distribution of approximately $210 million from the spun-off unit before the transaction closes, which will enhance its financial flexibility for future business developments.
- Shareholder Structure Change: After the transaction, Modine shareholders will own about 40% of the new combined company, while Gentherm shareholders will hold the remaining 60%, allowing Modine to maintain a significant market presence post-merger.
- Strategic Focus Shift: Following the spin-off of the Performance Technologies division, Modine will concentrate solely on its Climate Solutions segment, particularly targeting the rapidly growing markets of data center cooling and commercial HVAC & refrigeration.
- Positive Market Reaction: Following the merger announcement, Modine's stock surged over 17% in early trading on Thursday, reflecting investor optimism about the merger's prospects, with retail sentiment shifting from 'bearish' to 'bullish', indicating strong confidence in future growth.
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