Thermal management systems maker Modine Manufacturing Co. has agreed to spin off its aftermarket business and merge it with Transpro Inc. to form a new, publicly traded company with annual revenue of more than $400 million U.S.
Shares of Transpro were up nearly 20 percent, or $1.10, at $6.75 in morning trading on the American Stock Exchange. Modine’s stock rose 1.7 percent, or 50 cents, to $29.92 on the New York Stock Exchange. (All figures in U.S. dollars.)
This summer, Modine Canada filed for bankruptcy. Known formally as MCL Heat Transfer Products, According to official records from the receiver, Beallor & Partners of Toronto, Ont., the company had some $600,000 CDN in shortfall of assets against liabilities when bankruptcy proceedings commenced.
Modine said the new amalgamated company will sell replacement radiators, heaters, air conditioning components and other products for automotive, truck and industrial applications in North America and Europe. For the 12 months ended Sept. 26, Modine’s aftermarket business had estimated revenue of $215 million. The operation has about 1,600 employees in North America and Europe.
After taking restructuring charges of $10 million to $14 million over the 12- to 18-month integration period, Modine said the new company should post annual, pretax savings of at least $20 million.
At the same time, Modine plans to purchase Transpro’s heavy-duty original equipment business, including a plant in Jackson, Mississippi, for $17 million in cash. The business, which has annual sales of about $45 million, makes heat exchangers for the heavy-duty truck and industrial original equipment markets and will complement Modine’s remaining operations. The company expects the deal to immediately add to earnings.
Modine investors will retain their shares of Modine Manufacturing and also receive 0.25 shares in the new company for every one share of Modine stock held at the closing. Modine shareholders will hold 54 percent of the new company while Transpro shareholders will own the remaining 46 percent stake. The deal is valued at about $1.44 per Modine share.
Transpro president and chief executive Charles E. Johnson will continue in his role, presiding over the new company. The board will consist of 10 members, including Johnson, five members of Transpro’s current board and four Modine directors.
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