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Allison (ALSN) to Buy AVTEC's Transmission & Machining Business

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Allison Transmission (ALSN - Free Report) recently announced that it has inked an asset purchase agreement to acquire the transmission portfolio of India-based AVTEC Ltd.’s off-highway business and Madras Export Processing Zone (MEPZ) off-highway component machining business.

The deal requires Allison to pay roughly $27 million in cash for AVTEC’s off-highway transmission portfolio and MEPZ off-highway component machining assets. Allison does not expect the buyout to materially impact its current fiscal-year earnings. The transaction is anticipated to conclude by the end of calendar-year 2021.

Headquartered in New Delhi, AVTEC, part of CK Birla Group, is an independent manufacturer of powertrain and precision-engineered products for the automotive, off-highway, defense, agriculture and railway industries, in areas of both proprietary products and contract manufacturing. With years of expertise in manufacturing, AVTEC delivers competency across the entire value chain. The company serves some of the most renowned domestic and global Automotive and Off-Highway companies, including global OEMs, such as BEML, Caterpillar, Daimler AG (DDAIF - Free Report) , Ford (F - Free Report) , and several other established brands.

Allison is highly thrilled about the acquisition. The takeover of the transmission portfolio of AVTEC’s off-highway business will expedite Allison’s goal of pursuing additional business opportunities in these genres in India as well as international markets by offering tailor-made products that deliver superior performance, quality and productivity to customers.

With this acquisition, Allison will also merge AVTEC’s off-highway component machining operations, currently located at the MEPZ facility, into its Chennai manufacturing facility to continue producing housings for Allison’s off-highway transmissions. Moreover, this acquisition complements Allison’s comprehensive sourcing and operations strategies, thereby providing additional leverage to the company.  

Headquartered in Indianapolis, IN, Allison is a manufacturer of fully-automatic transmissions for medium- and heavy-duty commercial and heavy-tactical U.S. defense vehicles. In fact, the company is the largest producer of fully-automatic transmissions, holding the leading position in several niche markets. The firm also offers electric hybrid and fully-electric propulsion systems.

Few days back, Allison significantly boosted the electrification testing capabilities at its Vehicle Environmental Test Center, and revamped the same as the Vehicle Electrification and Environmental Test Center (VE+ET). The rebranding was implemented by Allison to better showcase the unique capabilities of the VE+ET facility as well as highlight the manner in which its engineers, external partners and clients are leveraging the center to facilitate electric vehicle (EV) development and validation programs.

In September, Allison also reached an agreement with Toyota Motors (TM - Free Report) -owned Hino Trucks to become its e-Axle development partner for the Class 6, 7 and 8 Battery Electric Vehicle (BEV) trucks. This collaboration is an exciting development for Allison, as the company looks to augment its electrified product portfolio to fulfill the company’s promise of providing the most reliable and valued propulsion solutions in the world. Further, Allison recently unveiled its eGen Power 100S and 130D e-Axles as the latest add-ons to its fully-electric portfolio of propulsion solutions. Allison’s eGen Power product family is designed to be fully maintenance-free during the life of the vehicle, slashing downtime and boosting eGen Power’s total cost of ownership advantage.

Allison currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.