General Motors Co. and China’s Sichuan Tengzhong Heavy Industrial Machinery now expect to complete the sale of GM’s Hummer brand by the end of February, a month later than previously announced.
The two companies reached a preliminary deal last summer and signed a definitive agreement in October. But Chinese regulators haven’t signed off on the deal yet, due in part to the country’s goal to move toward more environmentally friendly vehicles. The acquisition also flies counter to China’s consolidation efforts. Industry observers question whether Tengzhong, which has no experience making passenger vehicles, can run a global operation.
Under the proposed agreement, Tengzhong will take an 80% stake in Hummer, with Chinese industrialist Suolang Duoji holding the remaining 20%. Analysts value the deal at $150 million—less than one-third what GM hoped to get when it put Hummer on the block last June.
Privately owned Tengzhong was formed in 2005 through several mergers starting with 40-year-old machinery specialist Changdian Electric Co. The company makes dump trumps, fuel tankers and other special-use vehicles, construction machinery and structural components for highways and bridges.