Auto parts maker Dana has signed an agreement for the sale of its off-highway business to Allison Transmission for a total of $2.7bn.
The transaction is expected to be completed by the end of the fourth quarter of 2025, subject to regulatory approvals and customary closing conditions.
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The sale price is equivalent to seven times the anticipated 2025 adjusted EBITDA of the off-highway business.
Post-transaction, Dana anticipates net cash proceeds of approximately $2.4bn after taxes, transaction expenses, and assumed liabilities.
Dana chairman and CEO R. Bruce McDonald said: “As we committed to last year, the sale of the Off-Highway business supports our strategy to become a streamlined light- and commercial-vehicle supplier with traditional and electrified systems.”
Dana’s strategy includes repaying around $2bn in debt to maintain a target net leverage ratio of about one times throughout the business cycle. This financial manoeuvre is aimed at optimising the company’s balance sheet.
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By GlobalDataMcDonald added: “This transaction is a critical step in our transformation, meaningfully strengthening our balance sheet, reducing complexity in our business, and allowing us to return significant capital to our shareholders.
“Combined with our ongoing $300m cost-savings initiatives, this transaction enables a focused path to grow and innovate, invest in our business, and continue to improve our cost structure.”
Furthermore, Dana’s board of directors has approved a capital return programme valued at $1bn to be executed by 2027.
This includes a $550m return to shareholders, scheduled at or before the transaction’s closure.
The off-highway unit makes powertrain systems, including axles, propulsion solutions and drivetrain components, for heavy-duty vehicles used in construction, industrial, mining, agriculture, forestry, and material handling applications.
The business operates in more than 25 countries and serves a global customer base supported by approximately 11,000 employees.
Goldman Sachs and Morgan Stanley are acting as financial advisors for Dana, while Paul, Weiss, Rifkind, Wharton & Garrison is providing legal counsel. Ernst and Young has been appointed as the transaction advisor for this significant deal.
Latham & Watkins is serving as Allison’s legal advisor, while BofA Securities and KPMG are serving as financial and transaction advisors respectively.
