Updated from Tuesday, June 2
General Motors (GMGMQ) confirmed it has settled on a Chinese buyer for its Hummer brand.
In a statement Tuesday, the bankrupt U.S. automaker said Sichuan Tengzhong Heavy Industrial Machinery Co. will acquire the rights to the Hummer brand, along with a senior management and operational team. Sichuan Tengzhong also will assume existing agreements relating to Hummer's dealership network.
GM said as part of the deal it's contemplated that Sichuan Tengzhong will enter into a long-term contract assembly and key component and material supply agreement with GM.Sichuan Tengzhong is a private company, but the deal required approval by Beijing officials, who can veto any attempt at an overseas acquisition by a Chinese company and who closely follow deals over $100 million, the New York Times reported. GM said the sale is expected to close by the end of third quarter. Financial terms weren't disclosed. GM, which filed for bankruptcy protection on Monday, said the deal is expected to "secure" more than 3,000 U.S. jobs in manufacturing, engineering and at Hummer dealerships around the country. The transaction also includes plans by the investor to "aggressively fund" future Hummer product programs, GM said. "Hummer is a strong brand," said Troy Clarke, president of GM North America, on Tuesday. "I'm confident that Hummer will thrive globally under its new ownership. And for GM, this sale continues to accelerate the reinvention of GM into a leaner, more focused, and more cost-competitive automaker ." The Wall Street Journal reports GM will continue making Hummer H2 and H3 trucks and SUVs at plants in Louisiana and Indiana for the buyer. GM had until recently been entertaining offers for Hummer from various parties, including a Chinese investor, the Journal reports, with bids below $500 million. If a buyer wasn't found by early June for Hummer the brand likely would have been killed in bankruptcy court, said one person involved in the deal. GM named an investor for its Opel brand over the weekend -- Magna International (MGA) -- and is seeking buyers for Saturn and Saab, the Journal reports. Meanwhile, GM's China operation won't be affected by the parent company's bankruptcy and plans to open a new factory within five years even as the automaker closes U.S. facilities, the unit's president said Tuesday. GM China is sticking with a five-year plan to double annual sales to 2 million units and roll out 30 new or updated models, Kevin Wale told reporters, the Associated Press reports. He said China isn't included in GM's petition Monday for court protection from creditors and the unit's business plans are fully financed.