Dana Incorporated Announces Agreement to Sell Off-Highway Business for $2.7 Billion; $1 Billion Capital Return Authorization

Rhea-AI Summary

Dana Incorporated (NYSE: DAN) has announced the sale of its Off-Highway business to Allison Transmission Holdings for $2.7 billion, representing 7x the expected 2025 adjusted EBITDA. The transaction is expected to close in Q4 2025, generating $2.4 billion in net cash proceeds after taxes and expenses. Dana plans to use approximately $2 billion to reduce debt, targeting a net leverage ratio of 1x. The company's board has authorized a $1 billion capital return program through 2027, with $550 million to be returned to shareholders at or before the transaction closing. This strategic move aligns with Dana's transformation into a focused light- and commercial-vehicle supplier, streamlining operations while maintaining both traditional and electrified systems capabilities.

Positive

• Sale price of $2.7 billion represents a strong 7x multiple of expected 2025 adjusted EBITDA
• Substantial debt reduction of $2 billion will strengthen balance sheet
• $1 billion capital return program authorized through 2027, with $550 million to be distributed at/before closing
• Strategic focus on streamlined light- and commercial-vehicle operations could improve operational efficiency

Negative

• Divestment of entire Off-Highway business reduces revenue diversification
• Transaction closing subject to regulatory approvals, creating execution risk
• Significant business restructuring may cause temporary operational disruptions

Insights

Financial Restructuring Analyst

Dana's $2.7B Off-Highway sale transforms balance sheet, enables $2B debt reduction, and funds $1B shareholder returns while refocusing business.

Dana's $2.7 billion sale of its Off-Highway business to Allison Transmission represents a strategic shift with significant financial implications. The 7x multiple on expected 2025 adjusted EBITDA demonstrates strong valuation for this business unit. After accounting for taxes and expenses, Dana will net approximately $2.4 billion in proceeds, with $2 billion earmarked for debt reduction.

This transaction directly addresses Dana's capital structure, targeting a net leverage ratio of approximately 1x over the business cycle – a substantial improvement that strengthens financial flexibility. The $1 billion shareholder return program through 2027 ($550 million at or before closing) signals management's confidence in future cash generation capability.

Beyond the immediate balance sheet impact, this divestiture represents a fundamental strategic pivot. Dana is streamlining operations to focus exclusively on light- and commercial-vehicle markets, creating a more focused enterprise. This aligns with the company's parallel $300 million cost-savings initiatives, targeting improved operational efficiency.

The transaction simplifies Dana's business model, potentially improving investor understanding and valuation metrics while enabling more targeted capital allocation. Expected closing in late Q4 2025 indicates regulatory approval is anticipated but not guaranteed. This restructuring positions Dana with a cleaner balance sheet, more focused operations, and significant capital to deploy strategically in its core business segments.

• Price represents 7x the expected 2025 adjusted EBITDA of the Off-Highway business 
• Strengthens balance sheet through substantial debt reduction
• Positions Dana with a streamlined go-to-market approach dedicated to on-highway light- and commercial-vehicle customers
• Announcing a new $1 billion capital return authorization through 2027 with $550 million of capital return to shareholders at or before closing of the Off-Highway business sale

MAUMEE, Ohio, June 11, 2025 /PRNewswire/ -- Dana Incorporated (NYSE: DAN) today announced that it has reached a definitive agreement to sell its Off-Highway business to Allison Transmission Holdings, Inc. (NYSE: ALSN; "Allison") for $2.7 billion. This represents 7x the expected 2025 adjusted EBITDA of the Off-Highway business. The transaction, which is subject to customary regulatory approvals and closing conditions, is projected to close late in the fourth quarter of 2025.

"As we committed to last year, the sale of the Off-Highway business supports our strategy to become a streamlined light- and commercial-vehicle supplier with traditional and electrified systems," said R. Bruce McDonald, Chairman and Chief Executive Officer of Dana. "This transaction is a critical step in our transformation, meaningfully strengthening our balance sheet, reducing complexity in our business, and allowing us to return significant capital to our shareholders. Combined with our ongoing $300 million cost-savings initiatives, this transaction enables a focused path to grow and innovate, invest in our business, and continue to improve our cost structure."

McDonald continued, "Allison will be an excellent owner of the business and will ensure it remains a market leader for drive and motion systems for off-highway vehicles and equipment."

Following the successful close of the transaction, Dana expects to generate $2.4 billion of net cash proceeds after tax, other transaction expenses, and assumed liabilities. Dana plans to repay approximately $2 billion of debt to achieve target net leverage of approximately 1x over the business cycle.

Additionally, the Dana board of directors has authorized a $1 billion capital return program through 2027 with $550 million of capital return to shareholders at or before closing of the transaction.

Goldman Sachs & Co. LLC and Morgan Stanley & Co. LLC are serving as Dana's financial advisors. Paul, Weiss, Rifkind, Wharton & Garrison LLP is serving as Dana's legal counsel. Ernst and Young LLP is serving as transaction advisor.

Dana to Host Conference Call at 8:00 a.m. Thursday, June 12
Dana will host a conference call at 8:00 a.m. EDT on Thursday, June 12. The conference call can be accessed by telephone from both domestic and international locations using the information provided below:

Conference ID: 9943139
Participant Toll-Free Dial-In Number: 1 (888) 440-5873
Participant Toll Dial-In Number: 1 (646) 960-0319

Audio streaming and slides will be available online via a link provided on the Dana investor website: www.dana.com/investors. Phone registration will be available beginning at 7:30 a.m. EDT.
A webcast replay can be accessed via Dana's investor website following the call.

Non-GAAP Financial Information
Adjusted EBITDA is a non-GAAP financial measure which we have defined as net income (loss) before interest, income taxes, depreciation, amortization, equity grant expense, restructuring expense, non-service cost components of pension and other postretirement benefit costs and other adjustments not related to our core operations (gain/loss on debt extinguishment, pension settlements, divestitures, impairment, etc.). Adjusted EBITDA is a measure of our ability to maintain and continue to invest in our operations and provide shareholder returns. We use adjusted EBITDA in assessing the effectiveness of our business strategies, evaluating and pricing potential acquisitions and as a factor in making incentive compensation decisions. In addition to its use by management, we also believe adjusted EBITDA is a measure widely used by securities analysts, investors and others to evaluate financial performance of our company relative to other Tier 1 automotive suppliers. Adjusted EBITDA should not be considered a substitute for earnings (loss) before income taxes, net income (loss) or other results reported in accordance with GAAP. Adjusted EBITDA may not be comparable to similarly titled measures reported by other companies. Expected Off-Highway adjusted EBITDA is EBITDA for the Off-Highway segment adjusted for excluded operations and certain corporate costs.

We have not provided a reconciliation of our Off-Highway adjusted EBITDA to the most comparable GAAP measure of net income (loss). Providing expected net income (loss) is potentially misleading and not practical given the difficulty of projecting event driven transactional and other non-core operating items that are included in net income (loss), including restructuring actions, asset impairments and certain income tax adjustments. See our most recent Annual Report on Form 10-K, subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K that include reconciliations with the most comparable GAAP measures that are indicative of the reconciliations that would be prepared upon completion of the period covered by the expected non-GAAP measure.

Forward-Looking Statements
Certain statements and projections contained in this communication are, by their nature, forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on Dana's current expectations, estimates, and projections about Dana's industry and business, management's beliefs, and certain assumptions made by us, all of which are subject to change. Forward-looking statements can often be identified by words such as "anticipates," "expects," "intends," "plans," "predicts," "believes," "seeks," "estimates," "may," "will," "should," "would," "could," "potential," "continue," "ongoing," and similar expressions, and variations or negatives of these words. Forward-looking statements include, among other things, statements about the potential benefits of the proposed transaction; the expected net cash proceeds from the proposed transaction and plans to repay debt and return capital to shareholders; the prospective performance and outlook of Dana's business, performance and opportunities following the completion of the transaction, including the ability of the parties to complete the proposed transaction and the expected timing of completion of the proposed transaction; as well as any assumptions underlying any of the foregoing. These forward-looking statements are not guarantees of future results and are subject to risks, uncertainties and assumptions that could cause Dana's actual results to differ materially and adversely from those expressed in any forward-looking statement. Such risks and uncertainties include, without limitation, risks related to the ability of the parties to complete the proposed transaction on the proposed terms and schedule, including obtaining required regulatory approvals; risks associated with the proposed transaction, such as that the expected benefits of the proposed transaction will not occur; risks related to future opportunities and plans for Dana, including uncertainty regarding the expected financial performance and results of Dana following completion of the proposed transaction; disruption from the proposed transaction, making it more difficult to conduct business as usual or maintain relationships with customers, employees, or suppliers; and the possibility that if Dana does not achieve the perceived benefits of the proposed transaction as rapidly or to the extent anticipated by financial analysts or investors, the market price of Dana's shares could decline, as well as other risks related to Dana's business. Dana's Annual Report on Form 10-K, subsequent Quarterly Reports on Form 10-Q, recent Current Reports on Form 8-K, and other Securities and Exchange Commission filings discuss additional important risk factors that could affect Dana's business, results of operations and financial condition. The forward-looking statements in this communication speak only as of this date. Dana does not undertake any obligation to revise or update publicly any forward-looking statement for any reason.

About Dana Incorporated
Dana is a leader in the design and manufacture of highly efficient propulsion and energy-management solutions that power vehicles and machines in all mobility markets across the globe. The company is shaping sustainable progress through its conventional and clean-energy solutions that support nearly every vehicle manufacturer with drive and motion systems; electrodynamic technologies, including software and controls; and thermal, sealing, and digital solutions.

Based in Maumee, Ohio, USA, the company reported sales of $10.3 billion in 2024 with 39,000 people in 30 countries across six continents. With a history dating to 1904, Dana was named among the "World's Most Ethical Companies" for 2025 by Ethisphere and as one of "America's Most Responsible Companies 2025" by Newsweek. The company is driven by a high-performance culture that focuses on valuing others, inspiring innovation, growing responsibly, and winning together, earning it global recognition as a top employer. Learn more at dana.com.

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SOURCE Dana Incorporated

FAQ

What is the value of Dana's Off-Highway business sale to Allison Transmission?

Dana is selling its Off-Highway business to Allison Transmission for $2.7 billion, which represents 7x the expected 2025 adjusted EBITDA of the business.

How will Dana (DAN) use the proceeds from the Off-Highway business sale?

Dana plans to use $2.4 billion in net proceeds to repay approximately $2 billion in debt and return $550 million to shareholders through a capital return program.

When will Dana's Off-Highway business sale close?

The transaction is expected to close in the late fourth quarter of 2025, subject to customary regulatory approvals and closing conditions.

What is Dana's capital return program following the Off-Highway sale?

Dana's board has authorized a $1 billion capital return program through 2027, with $550 million to be returned to shareholders at or before the transaction closing.

What is Dana's strategic focus after selling the Off-Highway business?

Dana will focus on becoming a streamlined light- and commercial-vehicle supplier offering both traditional and electrified systems.