Business

Tuesday October 13, 2009

China’s Tengzhong seeks nod for Hummer buy


SHANGHAI: Tengzhong, a little-known Chinese machinery maker that has agreed to buy GM’s Hummer brand, aims to close the deal by early 2010 and has begun to seek regulatory approval for the purchase.

Sichuan Tengzhong Heavy Industrial Machinery’s lack of experience in the vehicle industry had stirred doubts over the deal, while state media said the Chinese government could harbour objections to taking over a gas-guzzling SUV brand.

Tengzhong, which first announced its intent to buy Hummer in June, had been in touch with the Chinese government after signing the landmark deal to acquire the brand last week, a Tengzhong spokeswoman said yesterday.

“We have started communicating with the relevant regulatory bodies and will continue to support the application process in accordance with the requirements,” she said, adding that Tengzhong hoped to close the deal late this year or early 2010.

The purchase agreement with General Motors Co, signed on Friday, underscores the fast rise and global ambitions of China’s vehicle industry, populated by a wide range of fast-growing, aggressive carmakers such as Geely Automobile, SAIC Motor Corp and BYD.

A source close to Tengzhong previously told Reuters that the Hummer business would be sold for about US$150mil, far less than GM’s earlier estimate that the brand could fetch more than US$500mil. Tengzhong will gain a globally known brand, intellectual property, a trademark and manufacturing expertise with the deal.

The Tengzhong spokeswoman did not specify which government bodies Tengzhong had contacted for approval of the deal.

China’s commerce ministry has authority over the deal while the National Development and Reform Commission would have to approve any new major investment in the country, such as building a new manufacturing base.

Tengzhong also needs to get vehicle-production licence from the industry and information technology ministry.

A commerce ministry spokesman said the ministry had yet to receive an application for the deal.

The Tengzhong spokeswoman said the company would explore opportunities to set up a Hummer manufacturing base in China targeting the Chinese market. The deal must also be approved by US regulators. — Reuters


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