GM to sell Allison Transmission

NEW YORK (CNNMoney.com) -- Troubled U.S. automaker General Motors announced a deal Thursday to sell subsidiary Allison Transmission to private-equity firms The Carlyle Group and Canada-based Onex Corporation for $5.57 billion.

The news sent GM's (up $0.72 to $38.13, Charts, Fortune 500) stock up 1.5 percent at market open.

Allison, with sales of about $2 billion a year, designs and builds transmissions for trucks and heavy duty commercial vehicles, the company's site said.

The sale will include 7 plants in Indianapolis, along with its international distribution and sales offices, according to GM's release.

The company employs about 3,400 people, the release said.

After the sale, president Lawrence Dewey, currently president of the Indianapolis Ind.-based maker of automatic transmissions, will become the firm's CEO, according to a statement from Onex Corporation.

GM, like its fellow U.S. automakers Ford (up $0.24 to $9.52, Charts, Fortune 500) and Chrysler, has been under competitive pressure to slash costs and restructure by Japanese firms such as Toyota (up $0.20 to $124.05, Charts) and Honda (up $0.34 to $36.00, Charts) in recent years.