General Motors announced this morning that it reached a preliminary purchase agreement for Hummer but would not reveal the company wishing to purchase the off-road brand. The name of the buyeris reportedto beSichuan Tengzhong Heavy Industrial Machinery Company.
The New York Times claims that GM signeda memorandum of understanding with Sichuan Tengzhong regarding the sale of GM’s Hummer brand. The company wants to become an automotive manufacturer and is based out of western China.
Sichuan Tengzhong is privately owned, but the deal reached today required Chinese government officials to overlook and pass the deal. The Chinese government reserves the right to veto any overseas acquisition and pays special attention to all deals valued over $100 million.
Estimates on the selling price of Hummer put it somewhere between $100 and $500 million, a broad spectrum, but another source of cash for bankrupt GM. Analysts estimated that the Hummer division would sell for under $500 million, but given the attention the acquisition received from the Chinese government, it is selling for more than $100 million.
Currently, Sichuan Tengzhong is involved in a wide variety of industries and is looking to get into building cars. Before the Hummer deal the company had started building heavy-duty trucks.
No one at GM would confirm the buyer’s name, as it was requested the buyer remain anonymous in the memorandum of intent. “It was their preference, and we respected that preference,” said GM’s CFO, Ray Young.
“Overall, we’re pretty pleased. If you think about the qualities we’d want in a new owner for the brand, this buyer really met all the criteria,” said a Hummer spokesman, Nick Richards. “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 Hummer deal is completed, it will be the first acquisition of a well-known American automotive brand by a Chinese company. With the struggling American automakers, many had speculated as to when this would happen.
Source: New York Times