Samsung Targets Modine in $8 Billion Data Center Cooling Push

Samsung Electronics is pursuing U.S. cooling equipment maker Modine at an estimated price of $7.5 billion to $8 billion, aiming to win AI data center orders from North American Big Tech firms. The approach applies a control premium of roughly 33% to 42% to Modine's $5.64 billion market capitalization before deal reports emerged.

The logic is geographic as much as technological. Samsung bought Germany's FlaktGroup last year for 1.5 billion euros, or about 2.2 trillion won. That deal delivered data center-specific products: coolant distribution units (CDU), computer room air handlers (CRAH) and fan wall units (FWU). What it did not deliver was U.S. manufacturing and a North American customer network.

Why does the U.S. market matter so much?

The numbers explain Samsung's focus. Commercial real estate firm JLL estimates the Americas hold about 50% of global data center capacity, and roughly 90% of that sits in the United States. Amazon, Microsoft and Google are buying high-performance AI chips in volume. Those chips generate server heat that demands serious cooling capacity, and that demand keeps growing.

Samsung is also building at home. A production line at its Gwangju plant, started this year at a cost of 240 billion won, is targeted to begin operating in early 2028.

What does Modine bring to the table?

Modine produces large chillers, precision air-conditioning units and coolant distribution units under its Airedale brand. It also holds free cooling technology, which uses cold outside air to cut power consumption. Combined with Samsung's FlaktGroup lineup, the two could offer customers both liquid- and air-based methods for handling server heat.

Modine is expanding fast. On March 11, it began 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 grow its chiller production lines from 13 to 20 by March next year. For Samsung, buying that capacity saves years compared with building a local plant from scratch.

The financials show why the price is high. Modine's data center segment revenue reached $439.7 million in the third quarter, up 95% year on year. New quarterly orders topped $1 billion. In May, Modine signed a long-term contract to supply more than $4 billion of cooling equipment from 2027 to 2029, with an advance payment of $165 million. The company forecasts revenue of up to $3.2 billion for fiscal 2027.

What stands between Samsung and the deal?

Shareholder consent may prove harder than price. Modine's articles require approval from more than two-thirds of total voting rights for major mergers. With about 53.11 million shares outstanding, Samsung would need roughly 35.41 million votes in favor. Modine's shareholder base is dispersed: BlackRock holds 5.4%, Vanguard Capital 4.5% and Vanguard Portfolio 4.1%.

Two structures are under discussion. Samsung could sign a merger agreement with Modine's board, then acquire 100% of shares after securing two-thirds support — the route it used in its 2017 Harman acquisition at $112 per share. Alternatively, it could launch a tender offer, secure more than 90% of shares and complete a short-form merger without a shareholders meeting.

Who else wants this market?

Competition is intensifying. LG Electronics is building a chiller plant in Virginia, targeted to open in the first half of next year, and expanding facilities in Pyeongtaek and Changwon. Japan's Daikin and U.S.-based Vertiv are growing through acquisitions.

An industry official said: "For AI data centers, what matters is not only the performance of cooling equipment but also stable supply and maintenance capability." Another added: "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."