Thursday, October 15, 2009

Hummer Sale Finalized

General Motors has signed a "definitive agreement" with Sichuan-based Tengzhong Heavy Industrial Machinery Company to buy GM's Hummer brand, as the deal first announced last June finally moves toward a conclusion. While financial terms were not disclosed, widespread media reports said Tengzhong will pay about $150 million.

GM's carefully worded statement said the agreement "will allow Tengzhong to acquire" Hummer, including ownership of the brand, trademark and "specific IP (intellectual property) license rights necessary for the manufacture of Hummer vehicles." The new owner would also assume Hummer's existing dealer franchise agreements.

In fact, it appears that Hummer eventually may be controlled by a young Chinese mining and chemical tycoon known as Li Yan on the mainland and Suo Lang Duo Ji in Hong Kong.

GM said Tengzhong, a privately owned manufacturer of mining and construction equipment, has set up a separate investment group to purchase Hummer. Tengzhong will hold an 80-percent stake in the group and Mr. Suo will hold 20 percent. GM described Suo Lang Duo Ji as a "private entrepreneur from Sichuan Province."

The Wall Street Journal described the 46-year-old Li, as he is better known in China, as a "local tycoon" who owns Lumena Resources, a company based in Sichuan and listed on the Hong Kong Stock Exchange. Lumena is the world's second largest producer of thenardite, a form of sodium sulfate that is used in laundry detergent and glass, as well as Chinese medicines.

The Standard newspaper in Hong Kong earlier this year said Li is "a key shareholder" of Tengzhong through his flagship company Huatong Investment. The Associated Press said Li maintains a luxury apartment in Hong Kong.

Tengzhong, which was formed in 2005, makes heavy industrial vehicles, such as fuel tankers, dump trucks, tow trucks, fire trucks and cement mixers, as well as oil-field and construction equipment.

GM said the deal with Tengzhong calls for contract assembly of the Hummer H2 and H3 to remain in the U.S. through June 2011, with a one-year option through June 2012. The existing Hummer management team at GM, including CEO James Taylor, will continue to manage the organization through the transition.

GM said it is certifying a new diesel version of the H3 for markets outside North America, and that future product development is focusing on six-speed transmissions, more efficient engines and alternative fuels.

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