GM has officially announced they've reached a tentative agreement to sell Hummer to China's Sichuan Tengzhong Heavy Industrial Machinery Company.
Once finalized, the agreement will transfer the Hummer brand, management team, and dealership network to Sichuan Tengzhong. For the time being, GM will be contracted to build Hummers at their domestic assembly plants while providing "key component and material supply" assistance. This effectively secures more than 3,000 US jobs and allows Hummer to continue operations without any significant production delays or management shakeups.
According to Tengzhong's CEO, Yang Yi, "The HUMMER brand is synonymous with adventure, freedom and exhilaration, and we plan to continue that heritage by investing in the business, allowing HUMMER to innovate and grow in exciting new ways under the leadership and continuity of its current management team." He added that, "We will be investing in the HUMMER brand and its research and development capabilities, which will allow HUMMER to better meet demand for new products such as more fuel-efficient vehicles in the U.S."
Despite Yi's US-focused statement, Sichuan Tengzhong has plans to rapidly expand Hummer's dealership network in China and the Middle East.
While many of us likely have our doubts about the brand's future with a Chinese manufacturer of road and bridge construction equipment, the decision to keep Hummer's management and engineering teams seems like a wise choice given the alternative.
Although GM declined to release the final purchasing price, they did state that they hope to have the transaction completed by the end of the third quarter.
Tengzhong In Advanced Talks To Purchase HUMMER From GM In Strategic Acquisition
Industrial Machinery Company To Invest in Growth and Global Expansion of Premium Off-Road Vehicle Brand; Deal is Expected to Secure Over 3,000 US Jobs
DETROIT and SICHUAN, June 2, 2009 - Sichuan Tengzhong Heavy Industrial Machinery Co., Ltd (Tengzhong) and General Motors Corp. today confirmed details of their proposed transaction, pursuant to which, Tengzhong, a major industrial machinery group, will acquire the rights to the premium off-road HUMMER brand, along with a senior management and operational team. It will also assume existing dealer agreements relating to HUMMER's dealership network. It is contemplated that Tengzhong will, as part of the transaction, enter into a long-term contract assembly and key component and material supply agreement with GM. In an earlier statement, GM said it expects the deal if successful to secure more than 3,000 US jobs. The final terms of the deal are subject to final negotiations.
Based in the Chinese province of Sichuan, Tengzhong is a privately-owned company and a leading domestic manufacturer of road, construction and energy industry equipment. It will expand into the premium off-road vehicle segment through what will be a strategic acquisition for Tengzhong and a catalyst for HUMMER's growth in the U.S. and around the world.
"The HUMMER brand is synonymous with adventure, freedom and exhilaration, and we plan to continue that heritage by investing in the business, allowing HUMMER to innovate and grow in exciting new ways under the leadership and continuity of its current management team," said Yang Yi, CEO of Tengzhong. Mr. Yang continued, "We will be investing in the HUMMER brand and its research and development capabilities, which will allow HUMMER to better meet demand for new products such as more fuel-efficient vehicles in the U.S."
HUMMER will continue to maintain its headquarters and operations in the U.S., and will continue to be managed by its existing leadership team. The team intends to expand HUMMER's dealer network worldwide, particularly into new and underserved markets such as China.
"Today HUMMER is a globally recognized brand with excellent growth prospects, both in terms of new markets and new products for our existing markets," said James Taylor, HUMMER chief executive officer. "With Tengzhong's investment and strong support, we will be able to make our visions a reality. This transaction, if successful, will secure more than 3,000 U.S. jobs, and allow us to embark on a more aggressive global expansion, ensuring a successful future with our new partners."
The transaction is expected to close in the third quarter of this year and is subject to customary closing conditions and regulatory approvals. Financial terms of the agreement will not be disclosed at this time.
Credit Suisse is acting as exclusive financial advisor and Shearman & Stearling is acting as international legal counsel to Tengzhong on this transaction. Citi is acting as financial advisor to GM.
About GM
General Motors Corp., one of the world's largest automakers, was founded in 1908, and today manufactures cars and trucks in 34 countries. With its global headquarters in Detroit, GM employs 235,000 people in every major region of the world, and sells and services vehicles in some 140 countries. In 2008, GM sold 8.35 million cars and trucks globally under the following brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, Hummer, Opel, Pontiac, Saab, Saturn, Vauxhall and Wuling. GM's largest national market is the United States, followed by China, Brazil, the United Kingdom, Canada, Russia and Germany. GM's OnStar subsidiary is the industry leader in vehicle safety, security and information services. More information on GM can be found at www.gm.com.
About Tengzhong
Sichuan Tengzhong Heavy Industrial Machinery Co., Ltd. ("Tengzhong") is one of China's major privately owned engineering companies. Tengzhong is a manufacturer of heavy machinery equipment with a presence in special-use vehicles, road and bridge construction equipment and construction and energy industry equipment.
Since its establishment, Tengzhong has quickly become a major manufacturer of machinery and construction components through a series of successful acquisitions. Tengzhong prides itself on its automated manufacturing equipment, its processing systems, significant research and development initiatives and commitment to innovation.
Get_real
June 3, 2009 1:37 PM
