WASHINGTON, Oct 10 – China\’s heavy machinery equipment maker Tengzhong finalized plans to acquire US auto giant General Motors\’ Hummer sport-utility vehicle brand, the two companies announced Friday.
The purchase by Tengzhong\’s purchase will be made through an investment entity, in which it will hold an 80 percent stake, a statement said.
Suolang Duoji, a private entrepreneur with holdings that include the Hong Kong-listed industrial chemical producer Lumena, will hold the remaining percent stake.
Tengzhong, among top privately owned engineering companies in China, will also assume existing agreements relating to Hummer\’s dealership network under the "definitive agreement" reached between the two companies.
Financial terms of the agreement, subject to customary closing conditions and regulatory approvals by governments in the United States and China, were not disclosed.
GM and Tengzhong in early June signed a tentative agreement for the Chinese firm to buy the Hummer nameplate, whose gasoline-hungry vehicles have lost favor.
"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\’s chief executive.
The US auto maker emerged earlier this year from a bankruptcy court-supervised restructuring and is majority owned by the US government.
"This transaction marks an exciting step for both Tengzhong and Hummer, as we invest in a business that has significant opportunity in the US and around the globe," said Yang Yi, Tengzhong chief executive.
He hoped the new venture would accelerate the creation of the next generation of more fuel-efficient vehicles.
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 models and AM General\’s Mishawaka assembly plant will continue to assemble the H2 units, the statement said.
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 United States related to the sale and manufacturing of Hummer vehicles, the statement said.
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.
Prior to joining Hummer, Taylor was General Manager of Cadillac.