General Motors Corp. announced Friday, June 29, that it has reached a definitive agreement for the company to sell its Allison Transmission commercial and military business to The Carlyle Group and Onex Corporation for about $5.6 billion. The transaction is structured to preserve GM’s and Allison’s competitive strengths in their respective product lines and is expected to close as early as the third quarter of this year.
Allison Transmission designs and manufactures automatic transmissions for medium- and heavy-duty commercial vehicles. Its products are used in on-highway, off-highway and vehicles. Headquartered in Indianapolis, Allison Transmission employs about 3,400 people, has seven plants in Indianapolis and sells its transmissions through a worldwide distribution network with sales offices in North America, South America, Europe, Africa and Asia. The company generates annual revenues in excess of $2 billion.
The sale agreement covers substantially all of Allison Transmission, including the seven manufacturing facilities in Indianapolis, and its worldwide distribution network and sales offices. The production facility in Baltimore is dedicated to the production of conventional and hybrid 2MODE transmissions used in GM’s retail pickup trucks and SUVs and will remain with GM.
“This is another important step to strengthen our liquidity and provide resources to support our heavy investments in new products and technology,” says Rick Wagoner, GM chairman and chief executive officer. “At the same time, this sale will position Allison for growth with strong partners in Carlyle and Onex, which have well-established track records of working effectively with their management teams, unions and employees.”
Onex is one of Canada’s largest corporations, with businesses that generate annual revenues of C$30 billion and have 184,000 employees worldwide. “We believe Allison is poised for excellent growth in its sector, with the increasing rate of adoption of automatic transmissions in commercial vehicles, both in North America and abroad,” says Seth Mersky, managing director of Onex. “Allison’s exceptional reputation for product quality and reliability, its strong brand and talented management team provide it with a competitive advantage that will allow the company to capture that growth.”
The Carlyle Group is a global private equity firm with $58.5 billion under management. “We are excited to partner with Onex, the Allison management team and employees as we grow this iconic brand and support its transition to a stand-alone business,” says Carlyle managing director Greg Ledford.