Dana Incorporated (NYSE: DAN) announced an agreement to combine with Eaton Corporation's (NYSE: ETN) Mobility business in a transaction valued at approximately $5.1 billion, according to a press release statement.

The transaction is structured as a Reverse Morris Trust, with Eaton shareholders owning at least 50.1% and Dana shareholders owning approximately 49.9% of the combined company at closing. Eaton will receive a cash distribution of approximately $1.1 billion, subject to adjustments.

The combined company expects to generate approximately $11 billion in sales and $1.7 billion in adjusted EBITDA on a pro forma 2026 estimated basis. The transaction is expected to deliver $250 million in annual run-rate synergies within 24 months following closing.

R. Bruce McDonald, Dana's Chairman, will serve as Executive Chairman of the combined company, while Byron Foster will serve as Chief Executive Officer. Both will assume their roles on July 1, 2026. Timothy Kraus will continue as Chief Financial Officer.

The combination integrates Dana's global powertrain, thermal, and sealing technologies with Eaton Mobility's commercial vehicle transmissions, engine and emissions products, and electrification capabilities.

Following the transaction, Dana has increased its 2030 targets to $14-$15 billion in sales, approximately 18% adjusted EBITDA margins, and an 8%-9% adjusted free cash flow margin, compared to previous targets of approximately $10 billion in sales and 14%-15% adjusted EBITDA margins.

The transaction has been unanimously approved by both companies' boards of directors. The deal is expected to close in the first quarter of 2027, subject to Dana shareholder approval, regulatory approvals, and other customary closing conditions.

The combined company will continue operating under the Dana Incorporated name and retain its New York Stock Exchange listing. Goldman Sachs & Co. LLC is serving as Dana's exclusive financial advisor.