Thursday, June 28, 2007
General Motors Corp. today announced that it agreed to sell its Allison Transmission commercial and military business to The Carlyle Group and Onex Corporation for $5.75 billion. In its press release, GM did not disclose any of the terms of the transaction including any financing contingencies. The transaction is not significant for GM so it will not be required to file the transaction agreement. According to Onex, an equity investment of approximately US$1.5 billion in Allison will be split equally between Onex and The Carlyle Group. The transaction is expected to close in the third quarter of 2007.
According to the Wall Street Journal, Allison is a key unit for GM. The auto maker acquired Allison in 1929 and "uses it to maintain a significant role as a supplier to the heavy-vehicle industry, which typically returns higher margins than the higher-volume light-vehicle market. It also uses Allison as an internal transmission supplier for its own heavier-duty vehicles."