IMPLICATOR
Samsung Electronics is reportedly in talks to acquire Modine Manufacturing, a maker of heating and cooling systems based in Racine, Wisconsin, according to a report from Bloomberg. Modine's market capitalization was $5.64 billion just before reports of the deal emerged. Its data center segment is growing the fastest, on demand from hyperscalers.
The two companies could reach a deal in the coming weeks. Nothing is final yet. The talks could still fall apart, and another bidder could enter the picture. Both companies declined to comment.
What Changed
- Samsung Electronics is reportedly in talks to acquire Modine Manufacturing, a Wisconsin maker of heating and cooling systems, and a deal could come together in the coming weeks.
- Modine's market capitalization was $5.64 billion just before reports of the deal emerged; its data center revenue reached $439.7 million in the third quarter, up 95% from a year earlier.
- Samsung bought Germany's FläktGroup for €1.5 billion last year; Modine has begun mass production of data center chillers at a new plant in Grand Prairie, Texas.
- Modine's articles of incorporation require approval from more than two-thirds of total voting rights for major mergers.
AI-generated summary, reviewed by an editor. More on our AI guidelines.
What Modine makes
Modine produces large chillers, precision air-conditioning units and coolant distribution units under the Airedale brand. It also has free cooling technology, which uses cold outside air to reduce cooling power consumption.
Data center revenue reached $439.7 million in the third quarter, up 95% from a year earlier. New quarterly orders topped $1 billion. In May, Modine signed a long-term contract with one customer to secure the capacity to supply more than $4 billion of cooling equipment from 2027 to 2029, and received an advance payment of $165 million.
Modine has also begun mass production of 2- to 3-megawatt data center chillers at a new plant of about 63,400 square meters in Grand Prairie, Texas. It plans to raise its chiller production lines from 13 to 20 by March. Seoul Economic Daily wrote that for Samsung, the plant would cut the time needed to build a local factory from scratch.
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Samsung's European foothold
Modine would not be Samsung's first HVAC acquisition. Last year Samsung bought Germany's FläktGroup for €1.5 billion. That deal brought coolant distribution units, computer room air handlers and fan wall units, which array multiple blowers.
A production line at Samsung's Gwangju plant, begun this year at a cost of 240 billion won, is targeted to start operating in early 2028.
The Americas account for about 50% of global data center capacity, and roughly 90% of that is in the United States, according to commercial real estate firm JLL. As Amazon, Microsoft and Google adopt high-performance AI chips in large volumes, cooling equipment that can handle server heat has grown more important.
"Securing Modine's local production facilities and sales network would put us in an advantageous position to win large projects from North American Big Tech firms," an industry official said.
The price and the vote
Assuming a purchase of a 100% stake, the expected price is estimated at $7.5 billion to $8 billion, Seoul Economic Daily reported. That range applies a control premium of about 33% to 42% to Modine's market capitalization before the reports. Modine has forecast revenue of up to $3.2 billion for fiscal 2027, which ends in March. Samsung's own market value is over $900 billion.
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Shareholder consent matters as much as the price. Modine's articles of incorporation require approval from more than two-thirds of total voting rights for major mergers. As of the end of June, holders included BlackRock with 5.4%, Vanguard Capital with 4.5% and Vanguard Portfolio with 4.1%. With about 53.11 million shares outstanding, about 35.41 million votes in favor would be needed.
Two approaches are under discussion. In the first, Samsung signs a merger agreement with Modine's board and wins the two-thirds vote. Samsung went through shareholder approval in its 2017 acquisition of Harman, paying $112 per share to secure the entire stake.
In the second, Samsung launches a tender offer first. With more than 90% of the stake, it could then pursue a short-form merger to clean up the remaining shares without a shareholders meeting, under certain conditions.
Rivals in the cooling market
LG Electronics is building a chiller plant in Virginia targeted to begin operating in the first half of next year. Japan's Daikin and U.S.-based Vertiv are expanding through acquisitions of related companies.
"If the Modine deal goes through, it would mean having a production and sales base for the data center cooling business in North America as well as Europe," an industry official said.
Frequently Asked Questions
Has Samsung agreed to buy Modine?
No. The two companies are in talks and could reach a deal in the coming weeks, but nothing is final yet. The talks could still fall apart, and another bidder could enter the picture. Both companies declined to comment.
What does Modine make?
Modine produces large chillers, precision air-conditioning units and coolant distribution units under the Airedale brand. It also has free cooling technology, which uses cold outside air to reduce cooling power consumption.
How much could the deal cost?
Assuming a purchase of a 100% stake, the expected price is estimated at $7.5 billion to $8 billion. That range applies a control premium of about 33% to 42% to Modine's $5.64 billion market capitalization before the reports.
Why do shareholders matter so much here?
Modine's articles of incorporation require approval from more than two-thirds of total voting rights for major mergers. With about 53.11 million shares outstanding, about 35.41 million votes in favor would be needed.
Who else is expanding in data center cooling?
LG Electronics is building a chiller plant in Virginia targeted to begin operating in the first half of next year. Japan's Daikin and U.S.-based Vertiv are expanding through acquisitions of related companies.
AI-generated summary, reviewed by an editor. More on our AI guidelines.
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Marcus Schuler
Editor-in-Chief and founder of Implicator.ai. Former ARD correspondent and senior broadcast journalist with 10+ years covering tech. Writes daily briefings on policy and market developments. Based in San Francisco. E-mail: editor@implicator.ai
