DETROIT – General Motors Corp. said on June 2 that Sichuan Tengzhong Heavy Industrial Machinery Co., Ltd. (Tengzhong), a Chinese industrial machinery group, will acquire the rights to the Hummer brand, along with a senior management and operational team, according to a GM statement.
Based on the preliminary agreement signed by the two parts, Tengzhong will assume existing dealer agreements relating to Hummer’s dealership network, and enter into a long-term contract assembly and key component and material supply agreement with GM. The final terms of the deal are subject to final negotiations.
Based in Sichuan Province of Southwest China, Tengzhong is one of China’s privately owned engineering companies. It is a manufacturer of heavy machinery equipment with a presence in special-purpose vehicles, road and bridge construction equipment and construction and energy industry equipment. The company is expected to expand into premium off-road vehicle segment through the acquisition.
“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,” said Yang Yi, CEO of Tengzhong.
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, said GM.
“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,” said James Taylor, CEO of Hummer.
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, said GM.
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, according to the statement.
GM, which has been put into bankruptcy protection by the U.S. government, has sold the Opel brand to Canada’s Magna earlier. Besides the Hummer and the Opel, GM also plans to sell the Saab and the Saturn in the future to become a leaner automaker.