GM Sells Allison Transmission for 5.6 Billion

[HEVguy]

GM Sells Allison Transmission unit for $5.6 Billion

AP - General Motors Corp. said Thursday 6/28 it has agreed to sell its Allison Transmission commercial and military business for about $5.6 billion to the private investment firms The Carlyle Group and Onex Corp. The sale includes seven manufacturing plants in Indianapolis and its global distribution network and sales offices. A production facility in Baltimore, which produces conventional and hybrid transmissions for pickup trucks and sport utility vehicles, will remain with GM.

Source: http://biz.yahoo.com/ap/070628/gm_allison.html?.v=1


I have mixed emotions about this, but overall, it sounds good! GM can still source some transmissions from them, and Allison will be a strong, independent, US transmission company as a result. However, it sounds like the 'Allison' branded tranny in the GM full-size trucks and the Dual Mode going into the 'light-duty' vehicles will all stay with GM! A great deal all around! - GMI Member HEVGuy

[HEVguy]

Just as a reference, GM's entire market cap is about $21 Billion,... so Allison is being sold for 25% of that value of the entire company! That goes to show you (IMO) how undervalued GM is in general, or in other words, how much the union and pension liabilities weigh down the GM stock!! It's truly amazing and even dis-hartening to see how these liabilities weigh down on the company. However, I seem to have increasing confidence, every quarter, that GM is doing the right things to realign their business (including on this all important labor front) and become a lean, mean and dominating automotive house!!!

[suckstobeyou]

gm sold only the commercial and military part of allison. which means the car and truck transmissions are still under gm's ownership. No need to source them out from allison, the belong to GM.
Only commercial products are affected.

[nadepalma]

Originally Posted by HEVguy

I have mixed emotions about this, but overall, it sounds good! GM can still source some transmissions from them, and Allison will be a strong, independent, US transmission company as a result. However, it sounds like the 'Allison' branded tranny in the GM full-size trucks and the Dual Mode going into the 'light-duty' vehicles will all stay with GM! A great deal all around IMO!

Good find HEVguy! Excellent. I agree, mixed emotions on this and all.

However, if the deal makes sense to GM and they have come to some kind of an agreement over I.P. rights etc. then I'm all for it.

I wonder, however, if the parts that GM keeps for itself will become simply part of "GM Powertrain" or if they will establish a new "division" within the company to continue the work of Allison under this new guise?

Originally Posted by HEVguy

Just as a reference, GM's entire market cap is about $21 Billion,... so Allison is being sold for 25% of that value of the entire company! That goes to show you (IMO) how undervalued GM is in general, or in other words, how much the union and pension liabilities weigh down the GM stock!! It's truly amazing and even dis-hartening to see how these liabilities weigh down on the company. However, I seem to have increasing confidence, every quarter, that GM is doing the right things to realign their business (including on this all important labor front) and become a lean, mean and dominating automotive house!!!

Good points as well. The market capitialization of GM has been a big issue for far too long. But don't forget that when you sell assets and divest them, they typically fetch a price that is over and above what it would be as part of a company ---- so literally each "part" is worth more seperately than the company combined ---- or at least this has been what I've noticed.

Regardless, I'm glad that GM is becoming more "streamlined" of a company so it can better focus resources and it's operations on it's core business. I'm all for diversification of businesses, but too many distractions will keep take their eyes off the ball. So while it's with a heavy heart that we read this, it's obviously in the better interest of the business overall.

PLUS, if GM is looking to sell it's heavy and medium duty trucks to an outside firm (products like the TopKick and Kodiak, etc), then the need for Alison becomes even less needed. I'm sure they supplied a great deal to these operations, and if GM sells them, it will be less for Alison to "do" within GM. Just like when GM sold GM Defense a few years back -- I'm sure Alison is still selling the new owners tranmissions and such, but there is less of a need.

Just my two cents.

[HEVguy]

I know a guy that worked at Allison, and said that it was a very well run/managed group. Hopefully, the portion that GM keeps, whether integrated with GM powertrain or seperate, will maintain that kind of environment!

[mbukukanyau]

GM will eventually sell itself at this rate

[ARCANGEL]

ummmm NO GM will not sell itself

[ericmvest]

Originally Posted by HEVguy

Just as a reference, GM's entire market cap is about $21 Billion,... so Allison is being sold for 25% of that value of the entire company! That goes to show you (IMO) how undervalued GM is in general, or in other words, how much the union and pension liabilities weigh down the GM stock!! It's truly amazing and even dis-hartening to see how these liabilities weigh down on the company. However, I seem to have increasing confidence, every quarter, that GM is doing the right things to realign their business (including on this all important labor front) and become a lean, mean and dominating automotive house!!!

I could not agree more with your post. The current management team seems to be the best General Motors has had in decades. Probably the best since Harlow Curtis was President and Al Sloan was Chairman. They seem to be allocating their financial resources in a smart manner and their relationships with the UAW and their suppliers are the best they have been in a long time. Hopefully Ron Gettelfinger, UAW President, and the General Motors executives can reach an agreement that will get General Motors' labor costs in line with the transplants. I am from Southern Indiana, very close to were Ron Gettelfinger is from. I do not know Ron, but I have met other Gettelfingers and they seem like a smart, hard working family. Hopefully Ron and the General Motors executives will do what is necessary.

[68CoupeDeVille]

Originally Posted by suckstobeyou

gm sold only the commercial and military part of allison. which means the car and truck transmissions are still under gm's ownership. No need to source them out from allison, the belong to GM.
Only commercial products are affected.

Whew, I was just gonna ask that.

[sklunk]

Originally Posted by HEVguy

However, it sounds like the 'Allison' branded tranny in the GM full-size trucks and the Dual Mode going into the 'light-duty' vehicles will all stay with GM! A great deal all around IMO!

The Dual-Mode is definitely staying with GM, but it is my understanding that the Allison in the HD trucks will go to Carlyle/Onex. That design is currently maintained by the Allison Division of GM and that is what was sold off. GM will have to source the tranny from the new group (this is no different than when Delphi was spun off years ago).

Originally Posted by suckstobeyou

gm sold only the commercial and military part of allison. which means the car and truck transmissions are still under gm's ownership. No need to source them out from allison, the belong to GM.
Only commercial products are affected.

Allison only makes commercial products, so this affects ALL of their product. The tranny in the HD's is a "lite" version of their tranny for Medium Duty trucks, so it's still considered a commercial product.

[cincygoblue]

Originally Posted by mbukukanyau

GM will eventually sell itself at this rate

GM already sells itself. You can buy 1 share of the company for about $38.50 today. You could have bought a share for $30.00 two weeks ago, but then you would have also been accepting the risks of being an owner and you could have lost money. If you bought then, you made 28% on your investment in just two weeks!!!

[suckstobeyou]

Allison only makes commercial products, so this affects ALL of their product. The tranny in the HD's is a "lite" version of their tranny for Medium Duty trucks, so it's still considered a commercial product.

Last time I checked, CTS manual trans was an allison trans and so are a lot of other manual transmissions that GM utilizes.

[GMusa]

Well at least GM is keeping part of Allison for its SUVs and Trucks!

[1969CamaroSS350]

So they still will use the Allison with the Duramax, right? Reviews love the combination, it always gets praise.

[paul3230]

Originally Posted by mbukukanyau

GM will eventually sell itself at this rate

GM is simply doing what it must to stay competitve