Dana Announces Sale of European Hydraulics Business

Rhea-AI Summary

Dana Incorporated (NYSE: DAN) has announced the sale of its European hydraulics business to HPI Group, expected to be completed in the first half of 2024. The transaction includes operations in Italy, France, and Germany, generating around $90 million in sales in 2023. Dana will continue to receive components through a supply agreement with the new entity, focusing on industrial system sales.

Insights

Market Research Analyst

The divestiture of Dana Incorporated's European hydraulics business is a strategic move that can have significant implications for the company's focus and resource allocation. By offloading a non-core segment that generated $90 million in sales, Dana can streamline its operations and potentially improve its profitability margins. The transaction allows Dana to concentrate on industrial system sales, which may lead to better integration of its product offerings and services.

This deal also illustrates a trend where companies divest specific units to specialize more deeply in their core competencies. For stakeholders, such a move could signal a stronger future position in Dana's primary market segments. However, it's crucial to monitor how the loss of direct control over the hydraulics production might affect Dana's supply chain and cost structure in the long term.

Financial Analyst

The sale of Dana's European hydraulics business for an undisclosed amount could potentially impact its stock market performance, depending on the financial details of the transaction. Investors should consider the sale's effect on Dana's revenue, as the $90 million in sales represents a portion of their business. The supply agreement with HPI Group may offset some revenue loss and provide cost savings from reduced operational complexity.

Furthermore, the market will likely scrutinize the deal's terms and regulatory approval process. The successful completion of the sale could be seen as a positive indicator of Dana's ability to execute its strategic plans, which might be reflected in investor confidence and stock valuation.

Legal Expert

The transaction's requirement for regulatory approvals is a critical factor in its completion. The deal involves cross-border considerations within the European Union, which means it will be subject to antitrust and competition laws. The timeframe for regulatory approval can be unpredictable and may affect the expected completion in the first half of 2024.

Additionally, the supply agreement between Dana and the HPI Group post-sale is a complex legal arrangement that ensures Dana's continued access to essential components. The terms of this agreement are crucial as they will dictate the future relationship between the two entities, including pricing, quality control and delivery guarantees. It's an important aspect for stakeholders to understand, as it will influence Dana's operational capabilities and risk profile going forward.

MAUMEE, Ohio, Feb. 21, 2024 /PRNewswire/ -- Dana Incorporated (NYSE: DAN) announced today that, as part of an ongoing evaluation of its operations and product portfolio, the company has entered into a definitive agreement to sell its European hydraulics business to HPI Group, a hydraulics business jointly held by Apogee Group and EiM Capital.

The transaction is expected to be completed in the first half of 2024, subject to regulatory approvals and customary closing conditions.

The transaction includes operations in Italy, France, and Germany that produce industrial components, including hydraulic motors, pumps, valves, and power packs.  In 2023, the business generated approximately $90 million in sales to external customers.

Under the terms of the agreement, Dana will enter into a supply agreement whereby the newly combined hydraulics business will continue to provide components to Dana. 

"The sale of our European hydraulics production facilities allows us to focus on industrial system sales while having access to a broader portfolio through a supply agreement," said Jeroen Decleer, senior vice president and president, Dana Off-Highway Drive and Motion Systems.  "We look forward to continuing our relationship with HPI by selling and supplying hydraulic components through Dana's global network of service and assembly centers around the globe."

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 $10.6 billion in 2023 with 42,000 people in 31 countries across six continents.  With a history dating to 1904, Dana was named among the "World's Most Ethical Companies" for 2023 by Ethisphere and as one of "America's Most Responsible Companies 2023" 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.

About HPI 
Founded in 1966 and based in Chennevières sur Marne, near Paris, HPI is specialized in the design and production of hydraulic components based on external gear pump technology. Acquired jointly by EiM Capital and Apogee Group in 2022 from the Toyota Group, HPI employs 200 people and has world-class development and testing capabilities.

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SOURCE Dana Incorporated

FAQ

When is Dana Incorporated selling its European hydraulics business?

Dana Incorporated is selling its European hydraulics business in the first half of 2024.

Who is Dana Incorporated selling its European hydraulics business to?

Dana Incorporated is selling its European hydraulics business to HPI Group.

How much did the European hydraulics business of Dana Incorporated generate in sales in 2023?

The European hydraulics business of Dana Incorporated generated approximately $90 million in sales in 2023.

What countries are included in the operations of Dana Incorporated's European hydraulics business?

The operations of Dana Incorporated's European hydraulics business include Italy, France, and Germany.

Will Dana Incorporated continue to receive components after selling its European hydraulics business?

Yes, Dana Incorporated will continue to receive components through a supply agreement with the new entity.