In a deal described as a ‘major coup for the British automotive engineering industry’, Torotrak plc has secured a global licensing agreement with Allison Transmission, Inc.
Under the agreement, announced today (Tuesday, March 17th, 2009), the American giant will take an approximate 10% equity stake in Lancashire-based Torotrak, the ‘full-toroidal traction-drive transmission’ specialist. Torotrak’s ‘Infinitely Variable Transmission’ (IVT) technology is described as having potential applications in the automotive, commercial vehicle, off-highway and outdoor power equipment markets.
Torotrak’s Chief Executive, Dick Elsy, described it as a landmark deal for the company and said the news would help to lift some of the gloom surrounding the British automotive industry, currently deep in recession.
Allison’s equity stake, coupled with initial licence payments, involves an immediate cash injection of GBP7.1m into the British firm, which is fully listed on the London Stock Exchange.
In return Allison has gained licence rights to Torotrak’s transmission technology as well as options over global manufacturing and sales exclusivity in the small to medium truck and bus market, with similar options relating to large trucks and buses at a later date.
The total value of the licence fees to be paid to Torotrak under the agreement, should Allison take up all of the licensing and exclusivity options on offer, will be in the region of GBP18m to GBP28m; additionally, royalty payments will be made to Torotrak for every Allison transmission sold under the new arrangement.
Development work on a new medium-duty truck transmission will commence immediately with Torotrak supporting Allison in the programme under a separate engineering agreement.
The total deal, the largest ever secured by Torotrak, opens up major new markets for the company’s technology in the truck and bus sectors – currently experiencing a clear upturn in demand for gear shift automation – and builds on agreements already concluded with Tata Motors Ltd and a major unnamed European truck manufacturer. 
Elsy said: “This is a very significant endorsement of our technology. Allison is the world leader in commercial-duty automatic transmissions and this agreement provides us with access to large production volumes in this high value sector. To be announcing news like this in the teeth of an economic crisis speaks volumes for Torotrak and the value that is now being placed on our technology.”
Allison Transmission Chairman and CEO, Lawrence E Dewey, added: “We are excited about working with Torotrak to incorporate their unique technology into a new family of products that will offer our customers around the world new features and benefits.”