GM sells Allison to Canadian/U.S. investment partners

INDIANAPOLIS, IN — Allison Transmission has been sold to a prominent Canadian investment conglomerate and a U.S. private equity firm as General Motors continues to “strengthen its liquidity” and prepare for a difficult
fall that will include contract negotiations with the United Auto Workers union. The deal is expected to close as early as the third quarter of this year, in advance of those negotiations, pending union and regulatory approval.

The profitable GM division, which had a record year in 2006, fetched US$5.575 billion. It’s said to own 80% of
the worldwide commercial vehicle fully-automatic transmission market, supplying over 250 OEMs in
applications ranging from buses to heavy-duty off-highway equipment. Allison had revenues of more than US$2 billion last year.

The sale, to Onex Corp. of Toronto and The Carlyle Group of Washington, DC, includes seven manufacturing plants in Indianapolis and Allison’s global distribution network and sales offices. A production facility in Baltimore, Md., dedicated to the production of conventional and hybrid transmissions used in GM’s retail pickup trucks and SUVs, is not part of the sale.

Onex and Carlyle will be equal partners in the deal, with a combined equity investment of approximately US$1.5 billion, and have plans to take the company public. Lawrence E. Dewey, currently Allison’s president, will become chief executive officer of Allison Transmission.

Onex, a publicly traded giant (TSX: OCX), makes private-equity investments in the industrial and service sectors. Its various operating companies generate annual revenues of C$30 billion and employ 184,000 people worldwide. Among the best known of those companies are Cineplex Odeon and Hawker Beechcraft Corp., which makes business jet, turboprop, and piston aircraft.

Carlyle is even bigger. A global player, it has investments ranging widely across many industries including aerospace, healthcare, and telecommunications. Its portfolio of companies has more than US$87 billion in
revenue and employs more than 286,000 people around the world.

Allison’s history is a long one, starting on September 14, 1915, when James A. Allison founded the Indianapolis Speedway Team Company. It went on to pioneer the commercial automatic transmission, the first built in 1947 for a General Motors bus. Allison launched its first product for military applications in 1949, followed in 1953 with the first full power-shifting transmission for off-highway use. In 1956, it introduced the first fully automatic power-shifting transmission for commercial trucks. Allison has been a part of General Motors since 1929. Earlier this year it delivered its five millionth automatic transmission, fitted to a Renault refrigerated
truck in France.

GM first announced that it was considering a sale of Allison this past January. Last year it sold controlling
interest in its GMAC financing arm to an investment consortium.

“This is another important step to strengthen our liquidity and provide resources to support our heavy
investments in new products and technology,” GM chairman and chief executive officer Rick Wagoner said in
today’s announcement of the Allison sale. “At the same time, this sale will position Allison for growth with strong partners in Carlyle and Onex, which have well-established track records of working effectively with their management teams, unions and employees.”

“Allison should enjoy continued growth as the adoption rate of automatic transmissions in commercial vehicles
continues to grow,” said Seth M. Mersky, managing director of Onex.

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