Bankrupt General Motors is in advanced talks for selling its premium Hummer brand to Chinese group Sichuan Tengzhong Heavy Industrial Machinery for an undisclosed sum.
The proposed transaction, which is expected to save as many as 3,000 jobs, was announced on Tuesday, a day after the iconic auto maker filed for bankruptcy protection.
According to the planned deal, General Motors said in a statement on Tuesday that the Chinese industrial machinery group Tengzhong would acquire the rights to the premium off-road Hummer brand, along with the senior management and operational team.
In a separate statement, General Motors had said it has entered into a 'memorandum of understanding with a buyer for Hummer, its premium off-road brand.' The car maker noted that the deal is anticipated to secure more than 3,000 US jobs in manufacturing, engineering and at Hummer dealerships around the country.
The transaction is expected to close in the third quarter of 2009. However, the financial details have not been disclosed.
Interestingly, the privately-owned Tengzhong is not into auto manufacturing and is a leading Chinese domestic manufacturer of road, construction and energy industry equipment.
'We will be investing in the Hummer brand and its research and development capabilities, which will allow Hummer to better meet demand for new products such as more fuel-efficient vehicles in the US,' Tengzhong's CEO Yang Yi said.
The statement noted that Hummer would continue to maintain its headquarters and operations in the US, and would be managed by the existing leadership team. As part of the proposed transaction, Hummer would continue to contract vehicle manufacturing and business services from GM during a defined transitional time period.
"The proposed agreement will enable us to continue that growth and maximize the brand's potential through new, innovative off-road vehicles with improved efficiency and alternative fuel powertrains," Hummer Chief Executive Officer James Taylor said.
Credit Suisse is acting as exclusive financial adviser and Shearman & Stearling is acting as international legal counsel to Tengzhong on this transaction.
Citi is acting as financial adviser to General Motors.
