Hummer deal may be done by next week
By Fang Yan and Edmund Klamann |
August 29, 2009, Saturday
|
Print Edition
Print Edition
CHINA'S Tengzhong may finalize a deal with General Motors as early as next week to acquire the United States auto maker's Hummer brand, a source familiar with the deal said yesterday.
The deal would mark the first major Chinese acquisition of a distressed US auto asset amid a sharper-than-expected industry downturn. Chinese regulators will decide whether or not to approve the plans after the deal is finalized, the source said.
Sichuan Tengzhong Heavy Industrial Machinery has been in detailed negotiations with GM since it announced a tentative plan in June to take over the rights to the premium off-road Hummer brand from its US owner.
"Tengzhong executives have been traveling between the US and China in the past months and more will arrive in Detroit soon," said the source.
"If there are no big surprises, an agreement could be finalized next week," the source added.
Tengzhong declined to comment. A GM spokeswoman in China could not be reached for comment.
Tengzhong is expected to maintain Hummer's existing senior management and operational team as it previously promised, the source said.
It will also keep the dealership network of the US sport utility vehicle unchanged, added the source.
Hummer is currently sold in more than 30 countries, including China.
Commercial terms of the transaction were unknown, but an article posted on Chinese Internet portal www.163.com earlier this week put the price tag at US$170 million, much less than the US$500 million that GM had sought last year although in line with market talk between US$150 million to US$200 million.
Tengzhong, a little-known machinery maker based in southwest China, raised eyebrows when the Hummer deal first came to light nearly three months ago.
Tengzhong's lack of experience in the car industry stirred doubts while state media said the Chinese government would likely harbor objections to taking over a gas-guzzling SUV.
The deal would mark the first major Chinese acquisition of a distressed US auto asset amid a sharper-than-expected industry downturn. Chinese regulators will decide whether or not to approve the plans after the deal is finalized, the source said.
Sichuan Tengzhong Heavy Industrial Machinery has been in detailed negotiations with GM since it announced a tentative plan in June to take over the rights to the premium off-road Hummer brand from its US owner.
"Tengzhong executives have been traveling between the US and China in the past months and more will arrive in Detroit soon," said the source.
"If there are no big surprises, an agreement could be finalized next week," the source added.
Tengzhong declined to comment. A GM spokeswoman in China could not be reached for comment.
Tengzhong is expected to maintain Hummer's existing senior management and operational team as it previously promised, the source said.
It will also keep the dealership network of the US sport utility vehicle unchanged, added the source.
Hummer is currently sold in more than 30 countries, including China.
Commercial terms of the transaction were unknown, but an article posted on Chinese Internet portal www.163.com earlier this week put the price tag at US$170 million, much less than the US$500 million that GM had sought last year although in line with market talk between US$150 million to US$200 million.
Tengzhong, a little-known machinery maker based in southwest China, raised eyebrows when the Hummer deal first came to light nearly three months ago.
Tengzhong's lack of experience in the car industry stirred doubts while state media said the Chinese government would likely harbor objections to taking over a gas-guzzling SUV.
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