Modine Manufacturing Co., a diversified global leader in thermal management technology and solutions, announced it is exploring strategic alternatives for its Automotive business.
“Today’s announcement reinforces our strategic priority to continue to grow our global, market-leading positions in Commercial HVAC, Refrigeration, Commercial Vehicle, and Off-Highway market segments, both organically and inorganically,” said Tom Burke, president and CEO. “Building upon the momentum from our significant acquisition in 2016, which created our Commercial & Industrial Solutions (CIS) division, Modine has become and will continue to be a more diversified industrial, thermal management company with higher margins, improved cash generation and lower capital intensity.”
Modine’s Vehicular Thermal Solutions (VTS) portfolio currently serves three market segments – Automotive, Commercial Vehicle and Off-Highway. Within that portfolio, as well as compared to the rest of Modine’s segments, the company says the Automotive market has different industry dynamics, growth trajectories and strategic opportunities that require a deeper evaluation on how best to allocate capital and resources to optimize returns and strengthen Modine’s leading positions in the markets it serves.
“We launched our Strengthen, Diversify and Grow (SDG) strategy over three years ago to bring a higher level of organizational discipline and long-term focus to our business, which continues to drive our strategic actions today as we transform Modine into a leading diversified industrial company,” said Burke. “Through this process, we routinely evaluate overall fit and growth opportunities across all of our platforms, as we look to optimize our business portfolio. While I’m extremely proud of the great work the team has done to position our Automotive business as a market leader in key product lines which have delivered strong growth, the automotive market has very different dynamics than the other portions of our VTS portfolio and the balance of our industrial business. As a result, we have decided to explore strategic alternatives for the automotive business in order to identify the most successful path forward that will continue to optimize the value we offer customers and provide the highest return for shareholders. We remain excited about the growth opportunities within our Commercial Vehicle and Off-Highway end markets, both of which share common market fundamentals and complement our Industrial business.”
Modine’s Automotive business provides thermal management solutions for engine and powertrain cooling. In addition, this business is well-positioned to solve the most complex cooling problems for battery thermal management and the increasing electrification requirements of next generation drivetrains. Modine’s automotive business accounts for approximately 25 percent of total company revenue.
The company said it expects to complete its assessment of strategic alternatives over the next several quarters and will provide more information when appropriate or required.
To assist the company in its review, Modine has retained J.P. Morgan Securities LLC as its financial adviser and Latham & Watkins LLP as its legal adviser.