How Eaton & Dana Merger Will Reshape Auto Supply Chain

​​​​​​​Dana Incorporated has agreed to combine with Eaton's Mobility Business in a deal that values the new entity at more than US$10bn.

Both companies are headquartered in the US. They manufacture components for the automotive and commercial vehicle sectors.

Dana and Eaton have competed in the automotive components market for years. That rivalry will end when the merger closes in 2027.

Byron Foster, Dana's incoming Chief Executive Officer, says: "This transaction marks an important milestone in our transformation and positions Dana as a leading, scaled provider of powertrain solutions.

"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."

Powertrain and electrification combination

According to Dana, the combination will integrate its powertrain, thermal and sealing technologies with Eaton Mobility's commercial vehicle transmissions, engine and emissions products and advanced electrification capabilities. According to the companies, Eaton Mobility is valued at approximately US$5.1bn.

The transaction is structured as a Reverse Morris Trust. This financial manoeuvre minimises tax. 

Eaton shareholders will own at least 50.1% of the combined company at close. Dana shareholders will own approximately 49.9%.

Cost synergies and market diversification

Under the terms, Eaton will receive a cash distribution of approximately US$1.1bn.

In a press release, the companies say the combined company will benefit from increased scale and US$250m of run-rate cost synergies. It will also gain greater diversification across customers, geographies and end markets.

The news has come as a shock to most observers. An SEC filing shows that on 11 June, Antonio Galvao, President Mobility Group of Eaton Corporation, wrote to employees: "I appreciate that the news may feel surprising.

"As we move forward in the planning process to combine the companies, which we expect to complete in Q1 2027, we will continue to learn more about one another's organisations and the significant opportunities that exist because of our collective strengths."

Previous collaboration under RoadRanger brand

Antonio says the new company's senior management will have leadership from Eaton and Dana.

Despite being rivals in the automotive components sector, the car component makers have collaborated before under the RoadRanger brand. That marketing venture was dropped in the early 2010s.

Eaton will separate and combine its Mobility Group with Dana as part of the transaction. Upon closing, Eaton says it will operate a more focused portfolio concentrated on its Electrical and Aerospace businesses.

Paulo Ruiz, Eaton's Chief Executive Officer, says: "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."

The transaction will allow Eaton to focus on electrical and aerospace products. Dana will expand its presence in commercial vehicle powertrains.

The merger could reshape the automotive supply chain. Both companies supply major vehicle manufacturers globally.

The deal is expected to complete in the first quarter of 2027. Regulatory approvals will be required before the transaction can close.