Gentherm and Modine Announce $1 Billion Thermal Management Merger as MOD Shares Surge 17%

January 29, 2026 · by Fintool Agent

THRMMOD

Gentherm-0.55% and Modine Manufacturing+20.30% announced a transformational $1 billion Reverse Morris Trust transaction Wednesday that will combine Modine's Performance Technologies business with Gentherm, creating a scaled leader in thermal management solutions with $2.6 billion in combined revenue. 1

Modine shares surged 17% to $171 in morning trading—touching a 52-week high of $182.47—as investors embraced the deal that allows the company to shed its legacy automotive business and pivot to a pure-play data center cooling focus with 50-70% projected annual growth. Gentherm shares traded relatively flat, down less than 1%.

"This is a transformational day for the company," said Gentherm CEO Bill Presley during a special investor call. "We believe these companies are better together." 2

Deal Structure: Tax-Free Spinoff Delivers Cash to Modine

Under the Reverse Morris Trust structure—designed to be tax-free for Modine and its shareholders—Modine will spin off its Performance Technologies division and simultaneously merge it with Gentherm. 3

Transaction Economics:

4

The $1 billion valuation represents 6.8x trailing 12-month post-synergy adjusted EBITDA of $147 million for the Performance Technologies business, which generated approximately $1.1 billion in annual revenue with adjusted EBITDA of roughly $123 million. 5

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Strategic Rationale: Diversification Meets Data Center Focus

The deal delivers distinct strategic benefits to each party.

For Gentherm, the transaction nearly doubles the company's scale and significantly reduces dependence on the light vehicle market—a key strategic priority management outlined in early 2025. 1

"We've really been thinking about, from a strategic perspective, becoming less than 70% light vehicle. This transaction actually gets us there," CFO Jon Douyard noted on the call. The combined company will derive approximately 63% of revenue from light vehicle, with commercial vehicles and heavy-duty equipment representing about 30%, and the fast-growing power generation market contributing 6%. 2

For Modine, spinning off Performance Technologies sharpens focus on its Climate Solutions business—particularly the explosive data center cooling market. The Climate Solutions segment generated $1.6 billion in revenue for the twelve months ended September 2025 with an attractive 19.6% adjusted EBITDA margin.

Modine CEO Neil Brinker called the deal "a significant next step" as the company evolves into a pure-play climate solutions company, noting: "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."

Market Reaction: Modine Soars, Gentherm Steady

The divergent stock reactions tell the story of which company investors believe benefits most.

Modine shares have nearly tripled from their 52-week low of $64.79, with investors aggressively pricing in the data center growth story. The stock hit a fresh all-time high of $182.47 Wednesday morning before settling around $171.

Gentherm, meanwhile, traded essentially flat—suggesting investors are taking a wait-and-see approach on whether the company can realize the $100 million to $500 million in cross-selling revenue opportunities management identified. 1

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What is Modine's (MOD) data center cooling revenue and growth rate?Show me analyst estimates and price targets for MOD after the deal announcementCompare data center cooling competitors to Modine including Vertiv, Schneider Electric

Combined Company Profile

The merged entity will operate under the Gentherm name with headquarters in Novi, Michigan, while maintaining a significant presence at key Modine Performance Technologies locations including its Racine, Wisconsin Technical Center. 1

Leadership Team:

• CEO: Bill Presley (current Gentherm CEO)
• CFO: Jon Douyard (current Gentherm CFO)
• President, Modine Performance Technologies: Jeremy Patten
• Board: Expanded to 11 directors with 2 Modine nominees

Notably, Gentherm is acquiring the Modine brand as part of the transaction, and the Performance Technologies business will continue going to market under that name. 2

Pro Forma Financial Profile:

3

Management emphasized the operational synergies available from combining two thermal management pioneers. Modine Performance Technologies, with its 100-year history, brings a well-established operating system and 80/20 philosophy that Gentherm plans to leverage. 4

"Their plants are run well. Their plants are very connected digitally, which is something that we can learn from," Presley said after visiting six Modine assembly plants during due diligence. 5

Revenue Synergies: The Growth Thesis

Beyond the $25 million in identified cost synergies, management pointed to substantial revenue opportunities that could unlock $100 million to $500 million in incremental growth. 6

Cross-Selling Opportunities:

• Leveraging Modine's relationships to sell Gentherm's climate and comfort solutions into commercial vehicle and heavy equipment markets
• Product integration opportunities—Modine's thermal systems require valves, and Gentherm is a leading global valve supplier
• Geographic expansion into markets like India where Modine has established presence 7

"The level of excitement in that workshop where they were able to define a pipeline of actionable revenue opportunities that was north of $100 million... in a very short period of time, just speaking to the power of the opportunity here," Douyard noted. 8

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What is Gentherm's valve business and how big is it?Analyze commercial vehicle and heavy equipment thermal management market sizeShow me power generation backup systems market growth projections through 2030

Gentherm Revises 2025 Guidance

Alongside the deal announcement, Gentherm provided updated preliminary guidance for fiscal year 2025:

Gentherm plans to release full Q4 and FY 2025 audited results on February 19, 2026.

Path to Close

The transaction requires Gentherm shareholder approval, completion of SpinCo financing, a customary IRS tax ruling for the RMT structure, and standard regulatory approvals. Management is targeting a Q4 2026 close. 2

Key milestones investors should monitor:

1. Form S-4 Filing — Registration statement with proxy/prospectus for Gentherm shareholders
2. Form 10 Filing — SpinCo registration for the Modine Performance Technologies separation
3. IRS Tax Ruling — Required for tax-free treatment of the RMT structure
4. Gentherm Shareholder Vote — Approval needed given equity issuance
5. Regulatory Clearances — Standard antitrust review

The Bottom Line

This deal represents smart portfolio rationalization on both sides. Modine gets to harvest value from a lower-growth business while doubling down on the AI-driven data center boom. Gentherm gets the scale and end-market diversification it has been seeking, with a clear path to mid-teens EBITDA margins.

The sharply divergent stock reactions—MOD up 17%, THRM flat—suggest investors are more confident in Modine's data center pure-play story than Gentherm's execution ability. But at 6.8x post-synergy EBITDA, Gentherm is getting a fair price for a business positioned in recovering commercial vehicle markets with exposure to high-growth power generation.

The real test comes post-close: Can Gentherm capture that $100-500 million cross-selling opportunity, or will integration challenges dilute the strategic logic?

Related Companies:

• Gentherm Inc. (thrm)-0.55%
• Modine Manufacturing (mod)+20.30%