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Company in Sichuan to acquire Hummer
By Joyce Pan |
June 4, 2009, Thursday
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Print Edition
Print Edition
CHINA'S Sichuan Tengzhong Heavy Industrial Machinery Co plans to acquire General Motors' premium Hummer brand, the US auto maker said yesterday as it moved ahead with its bankruptcy restructuring plan.
Neither company disclosed the price of the tentative deal, but GM said earlier in bankruptcy court documents that Hummer was worth an estimated US$500 million.
Tengzhong will absorb Hummer's dealer agreements and senior management team, the companies said in a joint statement outlining their memorandum of understanding. GM and Tengzhong will also discuss a long-term contract for assembly, key components and material supply, the companies said in the statement.
Hummer will continue to maintain its headquarters and operations in the United States. Its leadership team intends to expand Hummer's dealer network worldwide, especially into new and under-served markets such as China, according to the agreement.
"Tengzhong will expand into the premium off-road vehicle segment through the strategic acquisition, and it is catalyst for Hummer's growth in the US and around the world," the statement said.
Local analysts were divided about how the deal would play out, however.
"As a globally recognized brand, Hummer can enhance Tengzhong's brand image. The deal could also benefit Tengzhong in technology advancement," said Zhu Junyi of the Shanghai Information Center's auto industry research office.
Tengzhong, a privately owned engineering company, was established in 2005 and quickly became a major manufacturer of machinery and construction components through a series of successful acquisitions. Among its products are cement mixers and tow trucks.
"It's hard for a company to be big and strong without some mergers and acquisitions. And a new round of industry reshuffling has begun and provides good opportunities," said Huang Yonghe, chief expert at the Auto Technical Information Research Institute.
But Jia Xinguang, a senior independent auto analyst, was not upbeat about the brand.
"Hummers consume much more fuel than average cars and don't even sell well in the US," Jia said.
Hummers are based on US military vehicles that gained fame during the 1991 Gulf War - a link that fuels their macho appeal.
As a part of GM's restructuring plan, the company is also trying to sell its Saab, Saturn and Pontiac brands and focus on its Chevrolet, Cadillac, Buick and GMC nameplates in hopes of becoming a leaner, profitable car maker.
The Hummer deal could help GM save more than 3,000 US jobs. The transaction is expected to close in the third quarter of this year, subject to regulatory approval.
Neither company disclosed the price of the tentative deal, but GM said earlier in bankruptcy court documents that Hummer was worth an estimated US$500 million.
Tengzhong will absorb Hummer's dealer agreements and senior management team, the companies said in a joint statement outlining their memorandum of understanding. GM and Tengzhong will also discuss a long-term contract for assembly, key components and material supply, the companies said in the statement.
Hummer will continue to maintain its headquarters and operations in the United States. Its leadership team intends to expand Hummer's dealer network worldwide, especially into new and under-served markets such as China, according to the agreement.
"Tengzhong will expand into the premium off-road vehicle segment through the strategic acquisition, and it is catalyst for Hummer's growth in the US and around the world," the statement said.
Local analysts were divided about how the deal would play out, however.
"As a globally recognized brand, Hummer can enhance Tengzhong's brand image. The deal could also benefit Tengzhong in technology advancement," said Zhu Junyi of the Shanghai Information Center's auto industry research office.
Tengzhong, a privately owned engineering company, was established in 2005 and quickly became a major manufacturer of machinery and construction components through a series of successful acquisitions. Among its products are cement mixers and tow trucks.
"It's hard for a company to be big and strong without some mergers and acquisitions. And a new round of industry reshuffling has begun and provides good opportunities," said Huang Yonghe, chief expert at the Auto Technical Information Research Institute.
But Jia Xinguang, a senior independent auto analyst, was not upbeat about the brand.
"Hummers consume much more fuel than average cars and don't even sell well in the US," Jia said.
Hummers are based on US military vehicles that gained fame during the 1991 Gulf War - a link that fuels their macho appeal.
As a part of GM's restructuring plan, the company is also trying to sell its Saab, Saturn and Pontiac brands and focus on its Chevrolet, Cadillac, Buick and GMC nameplates in hopes of becoming a leaner, profitable car maker.
The Hummer deal could help GM save more than 3,000 US jobs. The transaction is expected to close in the third quarter of this year, subject to regulatory approval.
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