General Motors officially announced today that it has entered into a definitive agreement to sell its Hummer unit to China's Sichuan Tengzhong Heavy Industrial Machinery Co., Ltd. The sale comes only four months after GM announced that it entered talks with the Chinese heavy equipment maker. Sichuan Tengzhong will purchase Hummer through an investment entity, in which it will hold an 80 per cent stake, while Hong Kong investor Suolang Duoji, a private entrepreneur, will get the remaining 20 per cent stake."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."
Although GM did not disclose the financial terms of the agreement media reports claim that the sale price was around $150 million.
GM said that under the terms of the final agreement, the Chinese company 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.
Sichuan Tengzhong will also get manufacturing, key components and business services from GM during a transitional time period, which was not defined by the Detroit automaker. As an example, GM said that its Shreveport assembly plant would continue to contract assemble the H3 and H3T models while AM General's Mishawaka assembly plant will continue to assemble the H2, both until June 2011, with an optional one year extension until June 2012.
"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."
