Eaton Spins Off $2.5B Mobility Business to Double Down on AI Data Centers
January 26, 2026 · by Fintool Agent
Eaton-1.76% is parting ways with its vehicle and electric mobility businesses, announcing plans to spin off its Mobility Group into an independent publicly traded company by early 2027. The move marks the culmination of a multi-year portfolio transformation for the Dublin-based power management giant, which is shedding its slowest-growing segments to concentrate on AI data centers and aerospace.
The separation is expected to be tax-free to shareholders and immediately accretive to Eaton's organic growth and operating margin.
Shares are trading flat in early Monday action, having swung from up nearly 4% in premarket trading to slightly negative as the broader market digested a busy news day ahead of Big Tech earnings and a Fed decision later this week.
Ask Fintool AI AgentThe Strategic Pivot
CEO Paulo Ruiz, who took the helm in June 2025, framed the spinoff as central to Eaton's "bold new 2030 growth strategy."
"Our team will have a sharpened focus on our core Electrical and Aerospace businesses, which are driven by powerful megatrends including electrification, digitalization and AI, reindustrialization, infrastructure spending and growth in the aerospace aftermarket and defense demand."
The numbers tell the story. While Eaton's core segments are thriving, the Mobility businesses have become an anchor:
| Segment | Q3 2025 Revenue | YoY Organic Growth | Operating Margin |
|---|---|---|---|
| Electrical Americas | $3.41B | +15% | 30.3% |
| Electrical Global | $1.72B | +10% | 19.1% |
| Aerospace | $1.08B | +14% | 25.9% |
| Vehicle | $639M | -9% | 17.8% |
| eMobility | $136M | -20% | -6.6% |
The Vehicle segment's organic sales decline was driven by "weakness in the North American truck and light vehicle markets," while eMobility suffered from European region softness.
Combined, the Mobility Group represents roughly 11% of Eaton's quarterly revenue but has weighed heavily on the company's overall organic growth rate—which would have been closer to 10% instead of 7% in Q3 without the mobility drag.
A Decade of Portfolio Transformation
This spinoff isn't happening in isolation. It's the latest move in Eaton's systematic exit from slower-growth industrial businesses:
Exits:
- 2020: Sold Lighting business
- 2021: Divested Hydraulics segment
- 2027 (expected): Spin off Mobility Group
Additions:
- January 2026: Completed $1.55 billion acquisition of Ultra PCS Limited, adding electronic controls and sensing products for aerospace customers
- Q2 2026 (expected): Close $9.5 billion acquisition of Boyd Thermal, a leader in liquid cooling technology for AI data centers
Ask Fintool AI AgentThe AI Data Center Bet
The Boyd Thermal acquisition looms large in understanding this spinoff. For $9.5 billion—representing 22.5x estimated 2026 EBITDA—Eaton is acquiring a leader in liquid cooling technology that's become critical as AI workloads push power densities to unprecedented levels.
Boyd Thermal is projecting $1.7 billion in sales for 2026, with $1.5 billion coming specifically from liquid cooling products for data centers. Combined with Eaton's existing power distribution and management products, the company will offer end-to-end solutions "from the chip to the grid" for hyperscale data center operators.
The strategic logic is clear: AI data centers require both massive power infrastructure and advanced cooling systems. By owning both capabilities, Eaton positions itself as a one-stop shop for the data center buildout—a market where demand is expected to surge as companies race to deploy AI infrastructure.
What Mobility Shareholders Are Getting
The spun-off Mobility Group won't be a distressed asset. The business holds leading positions in several markets:
- #1 in commercial truck transmissions and clutches in the Americas
- Leading provider of high-voltage EV fuses globally
- Strong presence in valve actuation technologies for multiple vehicle types
The company serves commercial vehicle, automotive, and off-highway OEMs with "mission-critical and safety-critical engineered solutions." As an independent entity, Mobility will have "more flexibility to pursue near- and long-term growth opportunities" without competing for capital against Eaton's faster-growing segments.
Bloomberg has reported the vehicle unit could be worth as much as $5 billion.
Ask Fintool AI AgentThe Numbers
Eaton's recent financial trajectory shows why management is making this bet:
| Metric | Q4 2023 | Q2 2024 | Q4 2024 | Q3 2025 |
|---|---|---|---|---|
| Revenue | $5.97B | $6.35B | $6.24B | $6.99B |
| EBITDA | $1.33B* | $1.43B* | $1.47B* | $1.64B* |
| EBITDA Margin | 22.3%* | 22.5%* | 23.6%* | 23.5%* |
| Net Income | $945M* | $993M | $971M | $1.01B |
*Values retrieved from S&P Global
Post-spinoff, Eaton expects its remaining business to show:
- Higher organic growth rates
- Expanded operating margins
- More consistent earnings
Transaction Details
- Expected Completion: Q1 2027
- Tax Treatment: Tax-free to shareholders for U.S. federal income tax purposes
- Financial Advisor: Morgan Stanley & Co. LLC
- Legal Counsel: Paul, Weiss, Rifkind, Wharton & Garrison LLP; Hogan Lovells
- Communications Advisor: Joele Frank, Wilkinson Brimmer Katcher
Eaton will announce Q4 2025 earnings on February 3, 2026, with management expected to provide additional details on the separation during the earnings call.
What to Watch
The spinoff faces several catalysts and risks:
Near-term:
- Q4 2025 earnings (Feb 3) for updated segment financials and spinoff guidance
- Progress on Boyd Thermal regulatory approvals (expected Q2 2026 close)
- Form 10 registration filing for the new Mobility entity
Structural questions:
- What leadership and board will the spinoff have?
- How will corporate overhead be allocated?
- Will Mobility carry debt from parent, or be spun clean?
- What ongoing commercial relationships will exist between the companies?
For investors who bought Eaton for its diversified industrial exposure, this is a clear signal: the company is all-in on electrification, data centers, and aerospace. The Mobility spinoff removes the last significant drag on that thesis.