GM sells Allison Transmission for $5.6B
The deal adds funds to GM's coffers as it gears up for crucial contract negotiations with unionized workers, although it also means losing a profitable division.
GM shares rose 74 cents, or 2 percent, to $38.15 Thursday after climbing as high as $38.66.
The sale to Onex Corp. and The Carlyle Group includes seven manufacturing plants in Indianapolis and its global distribution network and sales offices. A production facility in Baltimore, which makes conventional and hybrid transmissions for pickup trucks and sport utility vehicles, will remain with GM.
The Detroit automaker said the deal, expected to close as early as the third quarter of 2007 pending union and regulatory approval, is part of an effort to raise money and focus on its core business. It said in January it was considering a sale of Allison.
"This is another important step to strengthen our liquidity and provide resources to support our heavy investments in new products and technology," GM Chairman and Chief Executive Officer Rick Wagoner said in Thursday's statement. "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."