Dive Brief:
- Modine has agreed to acquire air handling manufacturer Scott Springfield Manufacturing, according to a Monday news release.
- Modine said the transaction will provide it with immediate access to a “highly complementary product portfolio and blue-chip customer base,” which includes hyperscale and colocation data centers and telecommunications, healthcare and aerospace companies.
- The acquisition will also provide Modine with a sales representative network in the indoor air quality market across the U.S. and Canada, providing cross-selling opportunities for its existing chiller portfolio, the company said.
Dive Insight:
Based in Calgary, Canada, Scott Springfield Manufacturing designs and engineers air handling units through two manufacturing facilities. One facility provides air handling equipment to hyperscale and colocation data centers, utilizing automated manufacturing equipment that optimizes the manufacturing site for higher production, while the second produces custom-built air handling units for the healthcare sector, Modine said.
Scott Springfield expects to report more than $100 million in final revenue for its 2023 fiscal year, with the total consideration for the transaction based on an enterprise value of approximately $190 million, per the release. The deal will be financed through a combination of cash and debt and is expected to close in the first calendar quarter of 2024, Modine said.
Modine management expects the acquisition to be immediately accretive to its earnings and anticipates incremental growth and future cost savings through its 80/20 operating model.
The acquisition comes as Modine continues to focus on the data center industry, with sales in the market growing 34% year over year in the third quarter of the company’s fiscal year, which ended Dec. 31, 2023.
“Modine's data center and IAQ businesses deliver these world-class HVAC solutions to markets where efficient and effective thermal management and ventilation are vital,” Eric McGinnis, president of climate solutions at Modine, said in the release. “The acquisition of Scott Springfield will expand our portfolio and manufacturing footprint, enabling us to meet a complete range of client needs in our targeted data center and IAQ markets, positioning us as a one-stop shop for mission-critical HVAC solutions."
During Modine’s Q3 earnings call, CEO Neil Brinker said the firm’s investment in immersion cooling technology and its development of a cooling distribution unit would help broaden its product portfolio, alongside efforts to transition its existing manufacturing plant in Grenada, Mississippi, to a data center facility.
“We are making the right investments to ensure that our data center business continues to grow and are delivering strong year-over-year improvements, despite challenging markets for the heat transfer and heating products,” Brinker said.
