GM Selling Allison For $5.6 Billion

Reuters- General Motors Corp. said on Thursday it will sell its Allison Transmission unit for $5.6 billion to private equity firms Carlyle Group and Onex Corp., sending the automaker’s shares to their highest level in 2-1/2 years.

GM shares rose as much as 3.3 percent, hitting their highest level since January 2005, as analysts speculated the automaker could use the proceeds from the sale to fund a cost-cutting deal on health care in upcoming talks with the United Auto Workers (UAW) union.

The negotiated price was more than some Wall Street analysts had expected GM to get for the business, which makes transmissions for commercial trucks, buses and military vehicles. GM had said in January it was looking to sell Allison.

GM, the world’s No. 2 automaker by volume behind Toyota Motor Corp. (7203.T), said the sale would include almost all of Allison’s assets, including seven manufacturing plants in Indianapolis and the unit’s worldwide distribution network.

The sale is expected to close as soon as the third quarter, GM said, provided it is approved by the UAW and regulators.

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