Reverse Morris Trust deal will combine Gentherm with Modine Performance Technologies in a tax‑free spin/merge, leaving Gentherm as the public company (NASDAQ: THRM) with Gentherm shareholders owning ~60%, Modine shareholders ~40%, a target close in Q4 2026, and a pro forma revenue base of about $2.6 billion; the transaction valuation is roughly $1 billion (~6.8x on $147M pro forma synergy Adjusted EBITDA) and Modine will receive $210 million in cash.
Management expects approximately $25 million of actionable run‑rate annual cost synergies by end of 2028 and is targeting a synergy‑adjusted EBITDA margin of roughly 13% with a path to the mid‑teens, while suggesting revenue synergy potential of “more than $100 million, but less than $500 million.”
The deal nearly doubles Gentherm’s scale and shifts its revenue mix away from light vehicles toward commercial/heavy‑duty and power generation markets, enabling cross‑selling using Modine’s blue‑chip channels and retaining the Modine brand for Performance Technologies to accelerate growth and geographic expansion.
Gentherm (NASDAQ:THRM) executives on a conference call outlined plans to combine the company with Modine’s Performance Technologies business in a transaction structured as a Reverse Morris Trust that is intended to be tax-free to Modine and Modine shareholders. The deal, which management described as “transformational,” is expected to nearly double Gentherm’s scale and materially shift its revenue mix toward end markets beyond light vehicles.
Chief Executive Officer Bill Presley said the combination accelerates Gentherm’s strategy of driving profitable growth, building operational excellence, and improving financial performance. He emphasized that joining with Modine Performance Technologies broadens Gentherm’s thermal management portfolio and engineering capabilities while expanding access to markets outside of light vehicle, including power generation, commercial vehicles, and heavy-duty equipment.
Presley said Gentherm has been working to develop commercial vehicle and heavy-duty equipment channels organically, and that the transaction provides established commercial channels that could accelerate cross-selling of Gentherm’s existing products into a broader customer base. He also pointed to power generation as a key growth market, citing demand for reliable energy for mission-critical operations such as data centers and increased need for backup power amid aging and unstable grid infrastructure.
Jeremy Patten, President of Modine Performance Technologies, described the business as a leader in “mission-critical thermal management technologies” with $1.1 billion in revenue. He said the segment serves heavy-duty applications, commercial and light vehicles, and has increased its focus on the power generation market through “80/20 efforts.” Patten highlighted what he called a blue-chip customer base of OEMs and Tier 1 suppliers, built over decades.
Patten also said Gentherm will acquire the Modine brand as part of the transaction, and Performance Technologies will continue to go to market as Modine due to strong brand recognition in its industries.
Management identified approximately $25 million of actionable run-rate annual cost synergies by the end of 2028. Presley said these opportunities were found after extensive interaction with Modine’s team and analysis of combined spending, with expected savings in:
Presley added that the companies are also evaluating footprint and equipment capacity utilization for potential additional value over a longer period.
Executives repeatedly framed the deal as “really about growth,” and shared several examples of potential revenue synergies discussed in joint workshops. These included cross-selling Gentherm Climate and Comfort solutions into Modine’s customer base, including agricultural tractors with enclosed cabins; integrating Gentherm’s valve technologies into systems where Modine supplies heat exchangers; and leveraging Modine’s footprint to help Gentherm expand in regions such as India.
In the Q&A, Presley said he had “zero worry” about product cannibalization, arguing that overlapping light-vehicle products are “remarkably different.” On revenue synergy potential, management said it could not quantify precisely but suggested a broad range, stating it is “more than $100 million, but less than $500 million.” Executives also referenced an internal workshop that produced a pipeline of “actionable revenue opportunities” north of $100 million in a short period of time, while stopping short of committing to that figure publicly.
Presley and Chief Financial Officer Jon Douyard highlighted operational excellence as a shared cultural and strategic focus. Presley said Gentherm has been standardizing operating models and key performance indicators, aligning inventory and supply chain, and working to maximize plant and equipment utilization. He characterized Modine Performance Technologies as having a well-established operating system and an 80/20 philosophy that has supported margin expansion even in a “flat revenue environment.”
In response to investor questions, Presley said Gentherm expects a “direct” knowledge-sharing approach, noting Modine’s plants are “run well,” “very connected digitally,” and have “very high overall equipment effectiveness.” Douyard added that the business has a “very lean structure” and described capital intensity as low, in the “2%–3% range,” specifically around “2.5%.”
Douyard said the combined company is expected to have approximately $2.6 billion of pro forma revenue and a “synergy Adjusted EBITDA margin” of roughly 13%, with management citing a path to expansion into the mid-teens. He said Gentherm expects to maintain a strong balance sheet, with expected leverage of about one turn upon closing and continued ability to generate strong cash flow.
Douyard outlined the key deal elements, including:
Structure: Reverse Morris Trust intended to be tax-free to Modine and Modine shareholders
Process: Modine will spin out its Performance Technologies business to Modine shareholders and simultaneously merge it with Gentherm
Valuation: Approximately $1 billion, equating to about 6.8x based on $147 million pro forma synergy Adjusted EBITDA for the trailing 12 months ended September 2025
Synergy basis: Valuation includes adjustments for standalone costs and the identified $25 million run-rate cost synergies, excluding commercial opportunity upside
Ownership: Gentherm shareholders expected to own about 60% of the combined company; Modine shareholders about 40%
Cash distribution: Modine to receive $210 million
Corporate details: Company will operate under the Gentherm name and remain listed on NASDAQ; headquarters to remain in Novi, Michigan
Governance: Modine to nominate two directors; Gentherm board to expand to 11 members
Leadership: Presley to remain CEO and Douyard to remain CFO; Modine Performance Technologies leadership expected to continue running the business as a segment
Timing: Targeting a close in the fourth quarter of calendar year 2026, subject to Gentherm shareholder approval and customary closing conditions
During Q&A, management clarified the data center-related exposure: Performance Technologies’ role is tied to thermal management for large generators providing backup power to data centers, while Modine Climate Solutions (which is not part of this combination) retains thermal management products inside data centers, such as cooling plates and cooling systems.
Douyard also provided an updated pro forma end-market mix: approximately 63% light vehicle revenue, about 30% from commercial vehicles and heavy-duty applications (including agriculture), and about 6% from power generation, which he said should be the fastest-growing portion. He added that medical remains a small part of Gentherm’s business but an area where the company intends to keep investing.
Gentherm Incorporated (NASDAQ: THRM) is a global developer and supplier of advanced thermal management technologies for automotive, specialty vehicle, medical, consumer and industrial markets. The company’s core focus lies in delivering integrated heating and cooling systems designed to enhance energy efficiency, comfort and safety across a wide range of applications. Gentherm’s product portfolio includes seat thermal systems, heated and ventilated seating surfaces, steering wheel heaters, battery thermal management solutions, and climate systems for electric vehicles.
In the automotive sector, Gentherm partners with leading original equipment manufacturers to engineer and manufacture high-performance thermal solutions that meet stringent industry demands for reduced weight, lower energy consumption and improved passenger comfort.
