GM Selling Allison Transmission
GM To Sell Allison Transmission
General Motors, as has been speculated, has agreed to sell its Allison Transmission unit for $5.6 billion to private-equity firms to raise funds for its auto operations.
GM’s has a preliminary agreement with Carlyle Group LP and Onex Corp. to buy Allison, which builds transmissions for GM vehicles, including its large trucks. Canada’s Onex Corp. had been helping Canadian auto supplier Magna Corp. in its failed bid to buy Chrysler Group.
"This is another important step to strengthen our liquidity and provide resources to support our heavy investments in new products and technology," GM Chief Executive Rick Wagoner said in a news release.
"The deal is expected to be done in the third quarter and requires union and regulatory approval. It will involve seven manufacturing sites in the Indianapolis area.
GM will retain its production facility in Baltimore, which is producing the transmission for the Two-Mode hybrid system that GM developed with DaimlerChrysler and BMW. Those transmissions will go into the Chevrolet Tahoe and GMC Yukon hybrids beginning this fall, the Chrysler Aspen and Dodge Durango in early 2008 and in an upcoming, yet-to-be-named BMW model.
The sale of Allison Transmission is another in a long list of GM’s sell-off of operations to raise funds. Another sale is likely to come soon as GM likely will sell its medium-duty truck operation in Flint, Michigan, to diesel engine maker Navistar International.
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