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General Motors’ Allison Transmission business is said to have received its highest bid from the private equity consortium consisting of Carlyle Group and Onex Corporation, according to sources tracking the auction.
GM declined comment on Carlyle and Onex having emerged with the highest bid, while both private equity firms did not return calls for comment.
Carlyle and Onex’s joint bid was still pending approval from the United Auto Workers (UAW) as of last week, said the first source.
Various private equity consortia were in the running for Allison, both sources said. A tandem of Greenbriar Equity, Clayton Dubilier & Rice, and Berkshire Hathaway dropped out of the bidding, leaving the winners as Carlyle and Onex, they said.
The source with knowledge further said Blackstone, which had been rumored to be working with European private equity conglomerate Permira, had also been in the running for the company. Centerbridge in combination with Bain, was also said by the source to have pursued Allison.
Allison’s price-tag, according to the banker, would likely surpass 10x EBITDA. This news service previously reported that Allison’s projected 2007 EBITDA was roughly USD 550m, and that a source without direct knowledge of Carlyle’s bid said it was his understanding the firm had bid around 10x EBITDA.
However, a market investor said he heard the unit might get sold for USD 4bn implying a 7.2X valuation on its projected FY07 EBITDA of USD 550m.
GM announced in late January that it was looking at strategic options for the division that makes automatic transmissions for heavy-duty trucks. Recently, the company said a sale of the division was probable.
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