Heavy vehicle parts and systems supplier Dana Incorporated has announced it is divesting its off-highway business, selling the sector in a deal worth $2.7 billion.
The American based supplier of axles, drivetrain and electrified propulsion systems says it has sold its off-highway business to Allison Transmission.
The deal is subject to customary regulatory approvals and is predicted to close late in the fourth quarter of this year.
Following the close, Dana is expected to generate $2.4 billion of net cash proceeds after tax, which Dana will use to repay approximately $2 billion of debt to achieve its target net leverage.
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“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 CEO and chairman R. Bruce McDonald says.
“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 $300 million cost-savings initiatives, this transaction enables a focused path to grow and innovate, invest in our business and continue to improve our cost structure.
“Allison will be an excellent owner of the business and will ensure it remains a market leader for drive and motion systems for off-highway vehicles and equipment.”
Additionally, Dana’s board has also authorised a $1 billion capital return program through 2027 that will see $550 million of capital be returned to shareholders.
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