Private Equity Picks Off GM's Allison Transmission

The dismantling of Detroit's vaunted production machine continues unabated, with General Motors on Thursday agreeing to sell its Allison Transmission business to private-equity firms Carlyle Group and Onex Corp. for $5.6 billion.

Allison transmissions are used in a wide variety of military and commercial vehicles, as well as in Chevrolet and GMC pickups with turbodiesel engines.

The sale includes Allison plants in Indianapolis, although GM said it would keep an Allison plant in Baltimore that makes conventional and two-mode hybrid transmissions for pickups.

News reports said the two private-equity firms outbid several others that have been actively pursuing automotive acquisitions, including Blackstone Group and Centerbridge Capital Partners.

Fourteen years ago, GM agreed to sell Allison to German transmission specialist ZF Friedrichshafen, but the sale was blocked by U.S. antitrust regulators.

GM stock hit a 30-month peak as Wall Street responded favorably to the latest asset sale.