Samsung Talks to Acquire Modine, Sending Shares Sharply Higher

Samsung Electronics is in talks to acquire MOD, the Wisconsin-based maker of cooling systems for data centers, Bloomberg reported on Thursday, citing people familiar with the matter. An agreement could come within weeks, though no deal has been confirmed and no price has been reported. Modine shares rose about 29% intraday on Friday and closed up 27.9% at $135.66. Before the report, the company was worth about $5.6 billion; some coverage framed that figure as a potential deal value, but it reflects Modine's pre-news market value rather than a reported offer.

The interest follows Modine's pivot toward data centers. In its fiscal second quarter ended September 30, data center sales rose 95% to $439.7 million and total net sales climbed 35% to $994.4 million, with record quarterly orders above $1 billion. Modine completed the October 1 spin-off of its Performance Technologies business, which was combined with THRM, and guides to fiscal-year revenue growth of 50% to 55%, or $3.1 billion to $3.2 billion. For Samsung, it would extend a push into data center cooling that included its agreement last year to buy FläktGroup for about 1.5 billion euros.

The fundamentals are not uniformly strong: data center gross margin fell 4.7 points to 19.7% last quarter, and free cash flow was negative $145.6 million in the first half. With the stock already up sharply, much of a takeover premium may be priced in, and a collapse of talks could reverse the move. The next checkpoints are any confirmation from either company and Modine's Analyst and Investor Day on November 18.