Eaton Corporation (NYSE: ETN) announced a definitive agreement to separate and combine its Mobility Group with Dana Incorporated (NYSE: DAN) in a reverse Morris trust transaction valued at over $10 billion in enterprise value.

Under the agreement, Eaton will value its Mobility Group at approximately $5.1 billion and receive a $1.1 billion cash distribution. Eaton shareholders will own at least 50.1% of the combined company following the transaction's completion.

The transaction is structured as a reverse Morris trust, where Eaton will first separate its Mobility Group through either an exchange offer or pro rata distribution to shareholders. Dana will then merge with a subsidiary of the Mobility Group, with Dana surviving as a wholly owned subsidiary.

The combined company expects to generate approximately $11 billion in pro forma revenue and $1.7 billion in pro forma estimated 2026 adjusted EBITDA, including $250 million in run-rate synergies expected to be fully realized within 24 months of closing.

Byron Foster, Dana's incoming chief executive officer, and Timothy Kraus, Dana's current chief financial officer, will lead the combined company. R. Bruce McDonald, Dana's current chairman and chief executive officer, will serve as executive chairman.

The combined company will operate as Dana Incorporated and continue trading on the NYSE under ticker symbol DAN. Dana's eight-member board will expand to include three additional directors designated by Eaton.

The transaction requires Dana shareholder approval and regulatory clearances. Both companies' boards unanimously approved the agreement. The deal is expected to close in the first quarter of 2027.

Following the separation, Eaton will focus on its Electrical and Aerospace businesses. The transaction is intended to be tax-free for U.S. federal income tax purposes to Eaton and its shareholders.