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GM sells Allison Transmission to Carlyle and Onex

General Motors has agreed to sell its Allison Transmission commercial and military business, including seven manufacturing facilities in Indianapolis and its worldwide distribution network

General Motors has agreed to sell its Allison Transmission commercial and military business, including seven manufacturing facilities in Indianapolis and its worldwide distribution network and sales offices, to the Carlyle Group and Canada’s Onex Corporation for some USD5.6bn.

The sale covers substantially all of Allison Transmission except its production facility in Baltimore, Maryland for conventional and hybrid 2MODE transmissions used in GM’s retail pick-up trucks and SUVs, which remain with GM. The transaction is expected to close as early as the third quarter of this year pending union and regulatory approval.

‘This is another important step to strengthen our liquidity and provide resources to support our heavy investments in new products and technology,’ says GM chairman and chief executive Rick Wagoner.

‘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 managing director Seth Mersky says: ‘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. 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.’

Adds Carlyle managing director Greg Ledford: ‘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.’

Allison Transmission is the leading designer and manufacturer of automatic transmissions for medium and heavy-duty commercial vehicles. Based in Indianapolis, Allison employs around 3,400 people and sells its products through a global distribution network with sales offices in North America, South America, Europe, Africa and Asia. The company generated annual revenues of more than USD2bn last year.

The Carlyle Group is a global private equity firm with USD58.5bn under management that invests in buyouts, venture and growth capital, real estate and leveraged finance in Asia, Europe and North America, focusing on aerospace and defense, automotive and transportation, consumer and retail, energy and power, healthcare, industrial, infrastructure, technology and business services and telecommunications and media.

Since 1987, the firm has invested USD28.3bn of equity in 636 transactions for a total purchase price of USD132bn. The firm employs more than 800 people in 18 countries, while the combined Carlyle portfolio companies have more than USD87bn in revenue and employ more than 286,000 people worldwide.

Onex, one of Canada’s largest groups with businesses that generate annual revenues of CAD30bn and have 184,000 employees worldwide, makes private equity investments through Onex Partners and the Oncap family of funds; it also has a real estate fund and a public markets fund.

Since its establishment in 1983, Onex has invested approximately CAD8bn of equity in sectors including electronics manufacturing services, aerospace, healthcare, financial services, automotive, metal services, customer support services, transportation and logistics, theatre exhibition, consumer products and communications infrastructure.

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