General Motors Announces Preliminary Agreement To Sell HUMMER to CHINA

[Guest GM]

General Motors Corp. (NYSE: GM), announced it has entered into a memorandum of understanding (MoU) with a buyer for HUMMER, its premium off-road brand. This transaction is the result of GM's strategic review of the HUMMER brand and the company’s ongoing restructuring efforts.

 

The sale is expected to close by the end of third quarter of this year and is subject to customary closing conditions, including receipt of applicable regulatory approvals.

 

The deal is expected to secure more than 3,000 U.S. jobs in manufacturing, engineering and at HUMMER dealerships around the country. The transaction also includes plans by the investor to aggressively fund future HUMMER product programs. Under terms of the MoU, the identity of the purchaser and proposed financial terms of the agreement are not being released at this time.

 

“HUMMER is a strong brand,” said Troy Clarke, President of GM North America. "I’m confident that HUMMER will thrive globally under its new ownership. And for GM, this sale continues to accelerate the reinvention of GM into a leaner, more focused, and more cost-competitive automaker ."

 

As part of the proposed transaction, HUMMER will continue to contract vehicle manufacturing and business services from GM during a defined transitional time period. For example, under the proposed agreement, GM’s Shreveport Assembly plant would continue to contract assemble the H3 and H3T through at least 2010.

 

"GM has developed HUMMER into a globally recognized off-road brand,” said James Taylor, HUMMER chief executive officer. “The proposed agreement will enable us to continue that growth and maximize the brand’s potential through new, innovative off-road vehicles with improved efficiency and alternative fuel powertrains. Today’s announcement is great news for HUMMER’s current and future customers, dealers, suppliers and employees around the globe.”

 

Other terms and conditions specific to the sale are not being disclosed at this time. Citi acted as financial advisor to General Motors Corporation.

 

About GM - General Motors Corp. (NYSE: GM), 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

[Guest Ron_*]

Looks like Hummer is going to become a Chinese brand.

 

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Sichuan Tengzhong Heavy Industrial Machinery Co., Ltd (Tengzhong) and General Motors Corp. (GM), 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 & Sterling is acting as international legal counsel to Tengzhong on this transaction. Citi is acting as financial advisor to GM.

 

http://www.sctengzhong.com

[Guest Xinhua]

The tentative deal for a little-known Chinese company to buy Hummer, a gas-guzzling and road-hogging brand under the General Motors, triggered doubts from Chinese analysts.

 

Sichuan Tengzhong Heavy Industrial Machinery Co., which said Wednesday that it was buying Hummer, has no experience in passenger-vehicle market and mainly produces industrial machinery.

 

"I had never heard of the company and was surprised at the news," said Yang Cheng, general manager of Sanhe Hummer Sales Center, one of the two branches that sold Hummer in Chengdu, capital of Sichuan Province.

 

A veteran in the automobile industry, Yang said he was not optimistic about the deal.

 

"Sales of some brands, including Hummer, had been dropping since the General Motors reported financial crisis in 2005. Though new high-energy efficiency models had been developed, they were not put into market possibly because of gloomy market prospect," Yang told Xinhua Thursday.

 

"To rejuvenate the brand, the buyer will have to input a lot of money in research, development and marketing," Yang said.

 

Zuo Xiaolei, an economist with China Galaxy Securities, said the bankruptcy of the General Motors was related with its strategy that failed to turn most of its car models energy-efficient.

 

"Producing gas-guzzling brands is against the current trend toward energy-saving and emission-reduction," Zuo told Xinhua Saturday. "Meanwhile, the company has no experience in producing passenger vehicles, adding difficulties for the company to manage the brand."

 

Wang Yukun, a researcher with the Yangtze River Delta Research Institute under Beijing-based Tsinghua University, said it would be hard for the buyer to "digest" Hummer.

 

"Tengzhong plans to maintain the current management team for Hummer and develop more energy-efficient models, but it is just their fantasies. If the current team could prevent the brand from slumping in any way, they would have done so before," Wang told Xinhua.

 

"Some companies put enterprise size and brand fame as priorities and took acquisition as a shortcut to get them," said Wang. "For example, Lenovo purchased IBM's PC business, but it still reports losses in the business now."

 

"It's difficult for a company to digest something dumped by others," Wang said.

 

The transaction is expected to close in the third quarter of this year and is subject to closing conditions and regulatory approvals, said a statement from Tengzhong.

 

Tengzhong can use the brand and will maintain the staff of 3,000 employees, the statement said.

 

Relative financial content on the deal will not be publicized at present, the statement said.

 

A poll conducted among 56,000 respondents by China's leading Internet portal Sina.com showed 49.4 percent were not optimistic about the purchase, 40.2 percent supported the purchase and 1.4 percent believed it was hard to say.

 

"Chinese companies should not buy things already eliminated by others in market and be rational in acquiring overseas brands," said a netizen Tian Dezheng in a comment.

[Guest William_*]

The result of two previous acquisitions by Chinese auto makers so far - Nanjing Automobile Corporation acquisition of the British brand Rover, and SAIC's acquisition of South Korea's Ssangyong - have all fallen short of their original goals.

[Guest Shaman]

I hope the Chines do purchase Hummer. They will improve their image buy helping keep Americans employed.