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GM unloads transmission unit for $5.6B

May 29, 2002
Missoura Ozarks
2012 💯 4LT GS Roadster

Mike Clymore, a skilled assembler with GM's Allison plant in Indianapolis, installs a
rotor assembly in a starter housing.

Industry shifts toward private equity

Private investors snapped up another piece of the U.S. auto industry Thursday, with General Motor Corp.'s decision to sell its Allison Transmission unit to a pair of buyout firms for $5.6 billion.

GM, which has lost more than $12 billion in two years, will use the money to cover turnaround-related expenses such as plant closings, worker buyouts and the development of new models.

The automaker agreed to sell Allison's commercial and military business, based in Indianapolis, to investment firms The Carlyle Group and Onex Corp. A production facility in Baltimore that builds conventional and hybrid transmissions for pickup trucks and sport utility vehicles will remain with GM.

GM's move is a key part of the automaker's strategy to build up reserves by shedding units not related to the core business of building passenger cars and trucks. Not counting the Alison deal, the automaker has sold more than $16 billion in assets in the past two years, including last year's $14 billion sale of the GMAC financial services company to private equity firm Cerberus Capital Management LP. The automaker also is considering selling a Flint-based unit that makes medium-duty trucks.

Wall Street on Thursday responded positively to news of the Allison sale, sending GM stock up 2 percent to $38.15 -- its highest level since January 2005.


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