06:25 AM EDT, 06/12/2025 (MT Newswires) -- Allison Transmission ( ALSN ) agreed to acquire the off-highway business of Dana (DAN) in a deal worth about $2.7 billion, the auto parts manufacturers said in separate late Wednesday statements.

The business, which has about 11,000 employees, operates in more than 25 countries and provides powertrain technologies, propulsion solutions and drivetrain components for the construction, agriculture and mining industries, among others.

The transaction, which requires approval from regulators, is expected to complete late in the fourth quarter, according to the companies. Allison's shares edged down 0.8% in Thursday's most recent premarket activity, while Dana gained 4.8%.

The transaction is in line with Allison's efforts to expand its emerging markets footprint and strengthen core technologies, the company said. Allison anticipates the acquisition to allow it to offer a wider range of commercial-duty powertrain and industrial solutions around the world.

"This acquisition marks a transformative milestone in our commitment to empowering our current and future customers with propulsion and drivetrain solutions," Allison Chief Executive David Graziosi said in the statement. "We look forward to harnessing this momentum to increase value for all of our stakeholders worldwide."

Allison estimates the deal to be immediately accretive to its earnings on a per-share basis and generate about $120 million in annual run-rate synergies. The firm will finance the acquisition through a combination of cash and debt.

"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 R. Bruce McDonald said. "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."

Dana expects to generate cash proceeds of $2.4 billion from the sale, after tax, transaction expenses and assumed liabilities, and repay roughly $2 billion of its debt. The company's board of directors also approved a $1 billion capital return program through 2027, with $550 million to be returned to shareholders on or before the deal's completion.

"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," according to McDonald.