Chinas machinery company to buy GM Hummer

General Motors has reached a preliminary agreement for the sale of its Hummer brand of large sport utility vehicles and pickup trucks to a machinery company in western China with ambitions to become a carmaker, a person with knowledge of the Chinese government approval process said Tuesday.
 
The Sichuan Tengzhong Heavy Industrial Machinery Company Ltd., based in Chengdu, concluded the agreement with G.M., said the person, who insisted on anonymity.
 
Sichuan Tengzhong is a privately owned company, but Tuesday's deal required preliminary vetting by Beijing officials, who retain the right to veto any effort at an overseas acquisition by a Chinese company and who give special attention to deals over $100 million.
 
G.M. announced the deal early Tuesday morning in Detroit but said that the memorandum of understanding would not allow it to reveal the buyer or the price. Industry analysts have estimated that the Hummer division would sell for less than $500 million.
 
G.M., in a blog posting, said it had seen the report regarding a Hummer buyer but could not comment on speculation.
 
Sichuan Tengzhong is known in China for making a wide range of road equipment, from bridge piers to highway construction and maintenance machinery. But even before the Hummer deal, the company has been moving more into heavy-duty trucks, including tow trucks and oil tankers.
 
Sichuan Tengzhong's offices were closed on Tuesday evening and calls to its headquarters were not answered.
 
Ray Young, G.M.'s chief financial officer, said Tuesday that the prospective Hummer buyer had asked G.M. not to disclose its identity until the deal was concluded. "It was their preference, and we respected that preference," Mr. Young told analysts and reporters on a conference call.
 
G.M. said that the deal would save about 3,000 jobs in the United States, including those at its 153 domestic dealerships, and that Hummer would remain based in the United States.
 
"Over all, we're pretty pleased," said a spokesman for Hummer, Nick Richards, without identifying the buyer. "If you think about the qualities we'd want in a new owner for the brand, this buyer really met all the criteria. They've got a proven track record in international business, and they've got a long-term vision for the brand. They've got the capital to invest in more efficient vehicles, which is what's necessary to grow the brand."
 
If the purchase is completed, it would be the first acquisition of a well-known American automotive brand by a Chinese company, after many months of speculation about when this might occur. Chinese automakers have already purchased the MG and Rover brands, two of the most famous names in British automotive history.
 
As a Chinese company, Sichuan Tengzhong could face a challenge in presenting the deal to American owners of Hummer. The brand has long sought to emphasize patriotism, stressing that the Hummer H1 was essentially the same vehicle built in the same factory as the Humvee that carries American soldiers into battle in Iraq and elsewhere.
From: New York Times

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