February 24, 2011 / 5:45 PM / 8 years ago

Exclusive: Allison Transmission planning $1 billion IPO

NEW YORK/DETROIT (Reuters) - Private equity-backed Allison Transmission has hired banks and is planning an initial public offering that could raise around $1 billion in the third quarter of the year, four sources familiar with the situation said.

Two of the sources said the IPO is expected to raise between $500 million and $1 billion. A third source said the IPO would be between $750 million and $1 billion and the fourth said the IPO would be at least $1 billion.

Excluding General Motors Co’s (GM.N) massive $23.1 billion offering, the average size of a U.S. IPO in 2010 was $150 million, according to data from Connecticut-based IPO research and investment firm Renaissance Capital.

Bank of America Merrill Lynch (BAC.N), Citigroup Inc (C.N), Credit Suisse Group AG CSGN.VX, Morgan Stanley (MS.N) and JPMorgan Chase & Co (JPM.N) have been hired as underwriters on the Allison IPO, the sources said.

The sources cautioned the plans are preliminary and could change. The information is not public and the sources declined to be named.

Bank of America, Citi and Morgan Stanley declined to comment. Credit Suisse, Allison Transmission, Carlyle and Onex were not immediately available for comment.

Allison makes automatic transmissions for fire trucks, dump trucks, garbage trucks, rental vans, buses, military vehicles and off-highway vehicles.

It is based in Indianapolis with regional headquarters in China, the Netherlands, Brazil, India and Japan. It employs 2,700 people.

GM sold the transmission maker to Carlyle Group CYL.UL and Onex Group for $5.6 billion in 2007. Carlyle and Onex split the roughly $1.5 billion equity portion of the deal.

An IPO for Allison is another sign of an invigorated landscape for auto and auto supplier offerings, led by the GM IPO three months ago.

Among the offerings that could come this year are Chrysler Group LLC and suppliers International Automotive Components Group (IAC) and Delphi.

Despite recent concerns about a spike in oil prices, auto industry analysts still expect a rebound from a deep downturn in 2008 and 2009 that led to the bankruptcies of GM and Chrysler.

Chrysler emerged from bankruptcy under management control of Italy’s Fiat SpA FIA.MI.

Crude oil futures hit $100 in U.S. trading this week.

GM tried in 1993 to sell Allison to German supplier ZF Friedrichshafen AG ZFF.UL for $525 million, but the deal fell apart when U.S. antitrust regulators sued to block the sale.

Blackstone Group LP (BX.N) and Centerbridge Capital Partners also bid for Allison when it was sold to private equity in 2007.

Reporting by Clare Baldwin in New York and Bernie Woodall in Detroit; editing by Andre Grenon

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