We now have official word that General Motors and China’s Tengzhong have signed definitive agreements to transfer ownership of the HUMMER brand (complete release below).
“The investment from Tengzhong in Hummer will give the company the capital it needs to create new products and focus on the brand in a manner that it deserves,” HUMMER’s spokesperson told PickupTrucks.com. “We’ll be able to create new vehicles, like the Hummer HX Concept, that will help Hummer meet future environmental and regulatory standards as well as meet the demands and expectations of our customers.”
Tengzhong will hold an 80 percent stake in Hummer while a Chinese mining tycoon, Suolang Duoji, will hold the remaining 20 percent stake. Douji, also known as Li Yan, currently indirectly owns a large part of Tengzhong through an investment company called Sichuan Huatong Investment Holding Co.
According to a joint press release, “[Tengzhong] 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.”
The deal will now go through regulatory approval by the Chinese government and the U.S. government – neither of which is expected to object to the deal.
Complete release after the jump.
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.
About General Motors: General Motors, one of the world’s largest automakers, traces its roots back to 1908. With its global headquarters in Detroit, GM employs 219,000 people in every major region of the world and does business in some 140 countries. GM and its strategic partners produce cars and trucks in 34 countries, and sell and service these vehicles through the following brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, Opel, 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. General Motors acquired operations from General Motors Corporation on July 10, 2009, and references to prior periods in this and other press materials refer to operations of the old General Motors Corporation. More information on the new General Motors can be found at www.gm.com.
About The Buyer
The investment entity buying Hummer will be jointly owned by Tengzhong and private entrepreneur Suolang Duoji. Tengzhong will hold 80 percent of the entity and Mr. Suolang 20 percent.
Sichuan Tengzhong Heavy Industrial Machinery Co., Ltd. (“Tengzhong”) is one of China’s major privately owned engineering companies. Tengzhong is a manufacturer of heavy machinery equipment with a presence in special-use vehicles, road and bridge construction equipment and construction and energy industry equipment.
Since its establishment, Tengzhong has quickly become a major manufacturer of machinery and construction components through a series of successful acquisitions. Tengzhong prides itself on its automated manufacturing equipment, its processing systems, significant research and development initiatives and commitment to innovation.
Mr. Suolang Duoji, a private entrepreneur from Sichuan Province has holdings that include thenardite producer Lumena which was recently listed on the Hong Kong Stock Exchange.