Tengzhong Heavy has at last struck its deal to buy Hummer from GM. The troubled U.S. carmaker confirmed the sale subject to regulatory approval but did not disclose the price. This Bystander understands it to have been $150 million, about half the original asking price, and well below the $500 million GM said last year in its bankruptcy filing the brand was worth.
Privately-held Tengzhong will take an 80% stake in the company. Tengzhong shareholder (via Sichuan Huatong Investment Holding Co.) Suolang Duoji, will pick up the other 20% directly. The multi-millionaire Sichuanese also has mining interests and is founder chairman of Hong Kong-listed but Chengdu-based industrial chemicals maker Lumena Resources, which runs thenardite mining and production businesses in China (thenardite is one of those obscure but omnipresent chemicals used in manufacturing products as diverse as detergent powders and laxatives). It is likely that it is Suolang’s wealth that is bankrolling the deal.
Tengzhong gets the Hummer brand and intellectual property license rights to manufacture Hummers. It will also take over Hummer’s existing dealer agreements (more on the industrial logic behind the deal for Tengzhong ). Formal regulatory approval is still awaited. Shouldn’t be a problem on the U.S side. Officials in the Ministry of Commerce, who will have the final say, while uneasy with a Chinese company buying the poster child for gas-guzzlers when they are trying to turn the country’s car companies green, may just hold their noses.
Update: A Ministry of Commerce official said the ministry is awaiting a report on the deal from the Sichuan provincial office, knows nothing of the detail, and hasn’t yet received a formal application to approve it. More conspiratorial minds than mine will have to read the significance, if any, of that statement and whether it is signaling roadblocks or is just bureaucracy moving at its customary sedate pace.