Corp. sells its Allison Transmission unit, which the auto maker has controlled for 78 years, to the private investment firms Carlyle Group and Onex Corp. for about $5.6 billion.
Allison provides transmissions for GM’s heavy-duty trucks and commercial vehicles and also designs and manufactures automatic transmissions for other vehicle makers, including buses and military vehicles.
Based in Indianapolis, the supplier employs 3,400 people and operates seven plants in the U.S.
GM will retain a production facility in Baltimore, MD, that makes conventional and hybrid transmissions used in its light trucks and SUVs.
GM Chairman and Chief Executive Officer Rick Wagoner is quoted by The Wall Street Journal as saying the company chose to divest the profitable division to strengthen the auto maker’s liquidity and fund “heavy investments in new products and technology.”
Allison, which was acquired by GM in 1929, has provided the U.S. auto maker a piece of the heavy-vehicle industry, where profit margins are larger than the higher volume light-vehicle market.
A GM spokeswoman tells Ward’s the deal does not include debt, and the auto maker will book the entire $5.6 billion in cash when the transaction closes in the year’s third quarter.