GM and Sichuan Tengzhong Heavy Industry (Tengzhong) announced on October 9 that they signed a definitive agreement on the sale of GM’s all-road brand Puma business.
Under the terms of the final agreement, Tengzhong will acquire the ownership of the Hummer brand, trademark and trade name, and at the same time, have the right to use specific patents necessary for the production of Hummer vehicles. The buyer will also undertake the distribution agreement signed by Hummer and the existing distributors.
Tengzhong will complete the acquisition of Hummer by setting up an investment company and will own 80% of the investment company. Private entrepreneur Mr. Solang Duoji (Li Yan) holds the remaining 20% ​​of the shares. He currently also owns other businesses including the Glauberite Production Company, Xuguang Resources. The financial terms of the agreement are not disclosed.
The entry into force of the transaction is subject to the completion of the normal settlement conditions and the approval or review by the competent authorities in China and the United States. The signing of this final agreement made it possible for both parties to move forward with the relevant regulatory review process.
"Puma is a highly-known, global and unique brand. This agreement is another important milestone in the history of GM and Hummer branding," said Han Desheng, chairman and chief executive of General Motors. "Puma has an experienced senior. Leading the team and excellent vehicle design capabilities, Tengzhong's capital injection will make it even more promising."
According to the agreement, in an agreed transitional period, Hummer will commission GM to assemble vehicles, provide key components, and provide commercial services. General Motors' Shreveport assembly plant will continue to build H3 and H3T model cars, and AM General's Mishawaka assembly plant will continue to build H2 models. The two OEMs have until their end of June 2011 and have the option to extend the contract for one year until the end of June 2012. This transaction is expected to retain 3,000 jobs related to the sales and manufacturing of Puma in the United States.
Hummer will continue to be managed by the current leadership team and James Taylor will stay on as CEO of Hummer. Before joining Hummer, Jin Taile was the general manager of the Cadillac brand. He advocated and led the design innovation and technological transformation as well as the development of new models and revitalized the Cadillac brand.
“We are deeply honored to find a partner who understands the traditional value of Hummer and invests in it,†Jin Taile said. “The Hummer is rooted in the United States but has the ambition to open up global business opportunities. Through private investment funding, we can focus on The development of more fuel-efficient models for consumers has made Hummer a truly effective brand that combines design and craftsmanship."
After the deal is completed, Puma will be the first car manufacturer to have an alternative fuel-powered drive system for each model, and will ensure that H3 and H3T models can use E85 flexible fuels in 2010. Hummer is currently applying for an emission permit for H3 diesel vehicles, which will be marketed outside of North America. In the future, the development of Hummer products will focus on continuously improving the fuel economy and handling performance of existing models through the use of alternative fuel-powered drive systems, more efficient engines, six-speed transmissions and diesel engines.
"The signing of this transaction is an encouraging development for Tengzhong and Hummer. Our investment in the Hummer business has good development opportunities in the United States and around the world," said Yang Yi, general manager of Tengzhong Heavy Industry. "We are pleased with Puma's pragmatic efforts in energy conservation and environmental protection, and we believe that our investment will help accelerate the coming of next-generation energy-saving models, meet customer needs and meet future regulatory requirements."
Credit Suisse is the sole financial advisor to the transaction, and Sherman Sterling served as an international legal advisor to Tengzhong in this transaction. Citi serves as the exclusive financial advisor to General Motors.
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