BREAKING: GM officially sells Hummer to China's Sichuan Tengzhong
by Damon Lavrinc on Oct 9th 2009 at 1:13PM 
General Motors has reached an agreement to offload Hummer onto China's Sichuan Tengzhong Heavy Industrial Machinery, with Tengzhong taking an 80 percent stake and a private investor consuming the rest.
Details on the deal (available in the press release after the jump) include Hummer contacting vehicle manufacturing from GM, with the General's Shrevport and Mishawaka plants continuing to produce vehicles through June of 2011, with a possible extension until 2012. A recent report says the sale will net GM around $150 million, although the transaction still has to be approved by both U.S. and Chinese regulatory agencies, which could come later this year or in early 2010.
Tengzhong, which only produces commercial trucks and industrial equipment, has never entered into consumer vehicles before, but according to Yang Yi, chief executive officer of Tengzhong. "We are excited about some of the initiatives already underway at HUMMER that we believe our investment will be able to accelerate, particularly related to the creation of the next generation of more fuel-efficient vehicles to meet not only future regulations but also customer expectations."
[Source: GM | Photo by Scott Olson/Getty]
Gallery: Top 10 Hummer Moments in History
PRESS RELEASE
General Motors and Tengzhong Sign Definitive Agreement For Sale of HUMMER
DETROIT and SICHUAN, Oct. 9, 2009 - General Motors (GM) and Sichuan Tengzhong Heavy Industrial Machinery Co., Ltd (Tengzhong), today announced that the companies have entered into a definitive agreement that will allow Tengzhong to acquire GM's premium all-terrain HUMMER brand.
Under the terms of the definitive agreement, the buyer will acquire the ownership of the HUMMER brand, trademark and tradenames, as well as specific IP license rights necessary for the manufacture of HUMMER vehicles. The buyer will also assume the existing dealer agreements relating to HUMMER's dealership network.
Tengzhong intends to purchase HUMMER through an investment entity, in which it will hold an 80 percent stake. Mr. Suolang Duoji, a private entrepreneur with holdings that include the Hong Kong-listed thenardite producer Lumena, will hold the remaining 20 percent stake. Financial terms of the agreement were not disclosed.
The transaction is subject to customary closing conditions and regulatory approvals and/or review by government agencies in the U.S. and China. The completion of the definitive agreement enables the companies to continue and further the overall regulatory review process.
"HUMMER is a strong global niche brand and this agreement signifies another important milestone in writing the next chapter for both GM and HUMMER," said Fritz Henderson, GM President and CEO. "For HUMMER, the combination of its knowledgeable leadership team, vehicle design expertise and the capital financing of Tengzhong portend a successful future."
Under the agreement, HUMMER would contract vehicle manufacturing, key components and business services from GM during a defined transitional time period. For example, GM's Shreveport assembly plant would continue to contract assemble the H3 and H3T and AM General's Mishawaka assembly plant will continue to assemble the H2. Both facilities will produce the specified vehicles until June 2011, with an optional one year extension until June 2012. The deal is expected to secure more than 3,000 jobs in the U.S. related to the sale and manufacturing of HUMMER vehicles.
HUMMER will continue to be managed by members of its existing leadership team including James Taylor, who will remain in his current role as HUMMER's chief executive officer. Prior to joining HUMMER, Taylor was General Manager of Cadillac where he oversaw a reinvigoration of the brand, leading key innovations in design and technology as well as the development of new models.
"We are fortunate to have a partner who understands and recognizes the importance of continuing investment in HUMMER's heritage as a U.S.-based and branded company with a view toward capitalizing on global opportunities," said Taylor. "Backed by a privately owned and well-capitalized company, we are going to be able to focus on providing customers with more efficient models that deliver HUMMER's promise of authentic, purpose-built design and engineering."
Once the transaction is complete, HUMMER will become the first automaker to offer an alternative fuel powertrain in every model, with the addition of E85 FlexFuel capability in the 2010 H3 and H3T. HUMMER is also in the process of obtaining emissions certification for a diesel H3 that will be introduced in markets outside of North America. The brand's future product development will focus on improving efficiency and performance in current HUMMER models with alternative fuel powertrains, more efficient gas engines, 6-speed transmissions and diesel engines.
"This transaction marks an exciting step for both Tengzhong and HUMMER, as we invest in a business that has significant opportunity in the U.S. and around the globe," said Yang Yi, chief executive officer of Tengzhong. "We are excited about some of the initiatives already underway at HUMMER that we believe our investment will be able to accelerate, particularly related to the creation of the next generation of more fuel-efficient vehicles to meet not only future regulations but also customer expectations."
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.
For more information on the agreement go towww.transactioninfo.com/tengzhong.
Reader Comments (Page 1 of 5)
Kumail 1:16PM (10/09/2009)
o_O
That is all.
Reply
inteller 1:56PM (10/09/2009)
good luck with that...
MachinaDC5 1:22PM (10/09/2009)
I hope the private investor is actually Warren Buffet.
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Epsilon-Not 1:23PM (10/09/2009)
If this deal goes through, and the Koenigsaab one falls through, I will be very disappointed.
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MachinaDC5 1:28PM (10/09/2009)
Koenigsaab, that's good.
mk 2:47PM (10/09/2009)
I hope that is said the same way Gary Oldman did in Fifth Element... (and I agree with your sentiments.)
"I
Am
VERY
DIS - A - POINT - ED!!!"
nrb 1:23PM (10/09/2009)
"HUMMER will become the first automaker to offer an alternative fuel powertrain in every model"
Helps when you only have two models. Also, their idea of alternative fuel is E85.
At least AM General still has the H1.
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dukeisduke 1:28PM (10/09/2009)
"Helps when you only have two models. Also, their idea of alternative fuel is E85."
Exactly, what a yawner. I laughed when I heard the Hummer sale story this morning, reported breathlessly by the media. We've known that this deal was in the works for months.
Blown tranny 1:31PM (10/09/2009)
No, AM general does not have the H1. They have the HMMWV.
PJ 1:30PM (10/09/2009)
Don't let the door hit you on the way out, etc...
I still can't figure out why GM's hundreds of marketing experts didn't push this brand's sale two or three years ago. Surely they all knew "shock fashion" only lasts a season or two.
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Sea Urchin 1:25PM (10/09/2009)
Good, now we can all start trashing Hummer. I for one am tired of Chinese coming to USA and selling their dirty cars here, either make Hummer get 25 MPG or take it back to China. We don't need your dirty cars here in USA.
Too soon?
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imoore 2:29PM (10/09/2009)
I don't know what you've been reading or hearing, but it is the understanding that Hummers will continue to be built here in the US, even after the manufacturing deal with GM ends. I don't remember reading anywhere that Hummer production will be moved to China.
Glock23 2:52PM (10/09/2009)
They are going to still be built here and will have an office in Michigan.
Use some of that grey matter between your ears for a change.
Sea Urchin 2:59PM (10/09/2009)
I believe urchin brain is orange and i was being sarcastic, since now the dirtiest vehicle is no longer American, we basically end up breathing in all the Hummer produced emissions and get to keep none of the profits. And since Hummer gets about 3 MPG there are A LOT of emissions.
the4thheat 10:38PM (10/09/2009)
I'm pretty sure Urchin was kidding, but I actually do hope they figure out some way to make the Hummers at least slightly better performing in terms of mileage since they're friggin' horrible. I usually hate it when people suggest making random vehicles run on diesel fuel (i.e. the people constantly insist that diesel is superior to hybrids, because apparently nobody ever drives in city traffic in the diesel universe) but if any lineup out there could seriously justify having a diesel option it'd probably be these beasts.
Hell, maybe they could even make it the first consumer diesel hybrid, now that would be a crazy brand makeover.
DL 1:26PM (10/09/2009)
I think they want the designs of the trucks. The H3 would make a good commercial pickup for China and the H2 frame and powertrain can become the foundation for a 3tonner pickup for China's domestic market. Two platforms plus a 4cyl, 5cyl and two V8s plus their 4x4 and autoslushbox transmissions for $150 mil, especially for commercial applications, that is a steal
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Thomas 1:35PM (10/09/2009)
I thought they already stole the designs with their own copy-cat Hummer.
jv2k 3:24PM (10/09/2009)
I think they may also use Hummer to sell their cars here. I can't wait for the hummer dealers to begin selling small chinese cars.
Francis 1:26PM (10/09/2009)
they're gearing up for the real life rendition of "Red Dawn 2".
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Venom 1:27PM (10/09/2009)
Ha, their problem now.
Reply