General Motors Corp. has announced reaching a definitive agreement to sell its Allison Transmission unit to the Carlyle Group and Onex Corp. for approximately $5.6-billion. While the sale divests GM of a profitable operation, it raises cash the automaker will need when it heads into contract talks with the United Auto Workers later this year.

According to GM, the sale agreement covers substantially all of Allison Transmission, including seven manufacturing plants in Indianapolis and its worldwide distribution network and sales offices. However, a facility in Baltimore dedicated to the production of conventional and hybrid 2Mode transmissions used in GM pickups and SUVs will remain with the General.

GM declared the transaction is “structured to preserve GM's and Allison's competitive strengths in their respective product lines.” The sale is expected to close as early as the third quarter of this year pending union and regulatory approval.

Onex Corp. (www.onex.com) is one of Canada's largest corporations, making private equity investments through its Onex Partners and ONCAP family of Funds. The Carlyle Group (www.carlyle.com) is a global private equity firm with $58.5-billion under management. Carlyle invests in buyouts, venture & growth capital, real estate and leveraged finance in Asia, Europe and North America.

Headquartered in Indianapolis, Allison employs some 3,400 persons and sells its transmissions through a worldwide distribution network with sales offices in North America, South America, Europe, Africa and Asia. The operation generates annual revenues in excess of $2 billion.