Shanghai, February 26 (Gasgoo.com) Sichuan Tengzhong Heavy Industrial Machinery and General Motors announced yesterday that the deal for the Chinese company to buy GM's Hummer unit has been canceled as the purchase failed to get China's regulatory approval within the deal timeframe, media reported.
Unable to meet the extended deadline of Feb. 28 for closing the deal, both sides have decided to discontinue discussions on the $150 million transaction and terminate their agreement. Tengzhong said it was disappointed that the deal could not be further pursued, but "respected the outcome."
A spokesperson for China's Ministry of Commerce said earlier this week that Tengzhong could not provide regulators with a reasonable purchase plan, information about its investment plans and fund-raising plans and that the government is urging renewable, green and environmentally-friendly energy consumption.
The rejection is largely product specific, said a Beijing-based analyst, citing the gasoline-guzzling reputation of the Hummer relative to other brands. "The main reason is that Hummer is energy inefficient," the analyst stressed.
Earlier media reports said that Tengzhong might use an offshore investment vehicle to buy the Hummer brand if it could not get the regulatory approval, but now this route seems not acceptable, either.
GM is considering two bids for its Hummer brand after plans to sell it to China's Tengzhong failed, the Wall Street Journal reported today, but Reuters said GM is continuing to wind down Hummer operations.
