Tengzhong may build new Hummer plant in Chengdu

Shanghai, June 4 (Gasgoo.com) Sichuan Tengzhong Heavy Industrial Machinery Co, a machinery company based in western China, will spend 550 million yuan (US$80.5 million) to buy Hummer brand, and invest another 450 million yuan to set up a new Hummer production line in Chengdu, the capital province of Sichuan, Chengdu Business Daily reported Thursday, citing a letter of intent from Tengzhong.

GM said on Tuesday that it has signed a memorandum of understanding with Sichuan Tengzhong for sell Hummer to the Chinese machinery company. Tengzhong promised to retain Hummer's senior management and operational team, keep jobs and the production base in the United States until 2010.

According to the local Chinese newspaper, GM had contacted Tengzhong on a possible deal back in February this year. In March, Hummer's CEO, James Taylor, together with its management teams, came to Chengdu to meet with leaders of Chengdu municipal government and on March 11, Taylor and its delegation hold further negotiations with Tengzhong in Deyang, a city in the northeast part of Sichuan province.

Neither GM nor Tengzhong officially has disclosed financial details of the deal. According to GM's bankruptcy files, Hummer's value was around $500 million.

Yang Yi, CEO of Tengzhong, said in a statement that Tengzhong will continue to invest in the Hummer brand and its research and development capabilities so as to allow Hummer to better meet demand for new products such as more fuel-efficient vehicles in the U.S.

Tengzhong is one of the largest privately-owned enterprises in Chengdu. It specializes in making special-purpose vehicles and road and construction equipment but has no experience in the passenger-vehicle market. The company was founded in 1965 and shed its state-owned designation by turning private in 2005.

Tengzhong has been active in domestic mergers and acquisitions in recent years. It reportedly owns two manufacturing facilities in the suburbs of Chengdu, with a total of 4,800 employees.

Hummers CEO, James Taylor, together with a group of company executives, hold detailed negotiations with Tengzhong on its bids for Hummer in Deyang, a city in the northeast part of Sichuan province, on March 11, 2009.

Photo: Xinhua