(Reuters) -Dana will sell its off-highway business to Allison Transmission for $2.7 billion, the auto parts makers said on Wednesday.
Shares of the Maumee, Ohio-based Dana rose 7% after the bell. Its board authorized a $1 billion capital return program through 2027 with shareholders set to receive $550 million at or before the transaction closes. Allison’s stock fell 1.9%.
The off-highway unit makes mobile drivetrain and motion systems for heavy-duty vehicles used in construction, agriculture, material handling, mining, forestry and industrial applications.
Dana had announced plans to sell the business in November as part of a cost-cutting drive to navigate macroeconomic pressures and to simplify its business.
“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 Bruce McDonald said in a statement.
The transaction, set to close late in the fourth quarter, is expected to generate $2.4 billion of net proceeds.
The off-highway unit accounted for nearly 27% of Dana’s total revenue of $10.28 billion in 2024.
Goldman Sachs and Morgan Stanley are financial advisers to Dana, while BofA Securities is advising Allison.
(Reporting by Aatreyee Dasgupta in Bengaluru; Editing by Sahal Muhammed)
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