By Mark Huffman
ConsumerAffairs.com
October 9, 2009
The on-again, off-again sale of GM's HUMMER division to a Chinese company is apparently on again. GM has confirmed reports it is spinning off the HUMMER brand to China's Sichuan Tengzhong Heavy Industries.
Under the terms of the definitive agreement, the buyer will acquire the ownership of the HUMMER brand, trademark and trade names, 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. 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."
GM is batting .500 so far in its attempts to find buyers for its discontinued brands. Nine days ago the Penske Automotive Group pulled out of a deal to purchase Saturn.
This deal appeared in doubt as well. During the summer, the Chinese government reportedly took steps to block the sale. A BBC report at the time said Chinese government officials were concerned that Sichuan Tengahong Heavy Industries has little or no experience building cars. The company specializes in making heavy industrial construction equipment. The government also reported environmental concerns.
