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Investing.com -- Dana Inc (NYSE:DAN) stock jumped 9.5% after announcing a definitive agreement to sell its Off-Highway business to Allison Transmission Holdings Inc (NYSE:ALSN for $2.7 billion. Meanwhile, Allison shares edged down 0.9% following the announcement.
The transaction, which values the Off-Highway business at seven times its expected 2025 adjusted EBITDA, is projected to close late in the fourth quarter of 2025, subject to regulatory approvals and customary closing conditions.
Dana expects to generate $2.4 billion in net cash proceeds after tax and other expenses. The company plans to use approximately $2 billion to repay debt, aiming to achieve a target net leverage of around 1x over the business cycle. Additionally, Dana’s board has authorized a $1 billion capital return program through 2027, with $550 million to be returned to shareholders at or before the transaction closes.
"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," said R. Bruce McDonald, Chairman and CEO of Dana. "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."
For Allison, the acquisition aligns with its strategic priorities to expand its emerging markets presence and enhance core technologies. The company expects the deal to be immediately accretive to earnings per share and generate annual run-rate synergies of approximately $120 million.
Dana’s Off-Highway business operates in over 25 countries with approximately 11,000 employees, serving construction, forestry, agriculture, specialty, aftermarket, industrial, and mining segments.