DealZone

Could Chinese bid for Hummer go off-road?

February 23, 2010

China’s Tengzhong is having a hard time selling the People’s government on its big, bold plans to buy Hummer. That in and of itself should be enough to kill the deal. But there is some talk that the little-known construction machinery company, with no experience in the auto industry, is hungry enough for Hummer to use an offshore vehicle to buy the GM brand if it fails to win Chinese regulatory approval.

“Tengzhong has not given up hope yet to win government approval, but buying Hummer through an offshore investment vehicle could be an option if it can’t get the green light,” a source close to the deal, who asked for anonymity due to the sensitivity of the issue, told our reporters Fang Yan and Jacqueline Wong report from Shanghai.

Analysts told them the production base of the off-road sport utility vehicle would have to remain outside China to get such a deal to fly. That could be a monster-truck-sized roadblock, since it would mean the company would not have access to China’s biggest asset — its giant, cheap labor force.

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