Why Tengzhong wants to buy Hummer

Wen/Wang Paint forest It is hard to imagine that a private company from Sichuan, China, which has never dabbled in passenger car production, will become the buyer of Hummer, the world's auto manufacturing capital, and the US Detroit is heading for a full-blown recession. In the Chrysler bankruptcy protection period, the U.S. General Motors officially launched bankruptcy protection procedures on June 1.　　It is hard to imagine that a private company from Sichuan, China, which has never dabbled in passenger car production, will become the acquirer of GM's brand, Hummer. June 2, Sichuan Tengzhong Heavy Industry Machinery Co., Ltd. and General Motors on the sale of Hummer (HUMMER) to reach a memorandum. At present, the project has been reported to the relevant State departments for approval, if the progress is smooth, the earliest can reach a deal in the third quarter.　　Once the deal is approved, the private enterprise from Sichuan Province, Tengzhong, will become the first company to buy the U.S. vehicle brand. Although the memorandum of understanding is only a preliminary framework agreement, does not have the legal effect, but because Dongfeng, Guangzhou, SAIC, Changfeng and so on has had the purchase intention the enterprise to withdraw successively, in did not bid for the opponent's premise, Teng Zhong heavy industry grasps the more advantageous bargaining chip. According to the preliminary agreement between the two sides, Tengzhong will obtain the right to use the Hummer brand, long-term assembly contracts, major parts and Components supply, the main management team, and the Hummer distribution network related to the existing dealer contracts and so on. Among them, the long-term supply contract will continue to 2012 years. In addition, Hummer is developing hybrid cars, dual-mode car projects, also included in the acquisition contract.　　As the purchase contract does not include Hummer's production line in the United States, it would not be easy for Tengzhong to acquire Hummer in the case of a "voluntary" call from the Ministry of Commerce, the National Development and Reform Commission and the State Administration of foreign exchange three Chinese government departments. Sichuan "Black Horse" acquisition of American Hummer to browse Sichuan Tengzhong Archives, will find the enterprise is very worth pondering, and full of "legend." The company registered in 2005, even in its "most strengths" of the construction machinery industry, also has no reputation. It sounds like a myth for a company like this to buy Hummer.　　Based on intangible assets such as its brand and technology, GM, in his last year as GM's chief executive, had hoped that Hummer's selling price would be no less than 1 billion dollars. The total investment of 1.4 billion yuan Tengzhong heavy industry, only last year began trial production, registered capital of only 300 million yuan.　　In other words, regardless of the current confidentiality of the transaction price is ultimately 100 million U.S. dollars, 300 million dollars, or 500 million dollars, will greatly exceed the capital imagination of a general construction machinery manufacturing enterprises.　　Where do the huge acquisitions come from? Does Tengzhong have the strength to play this game of acquisition that people generally don't care about? Yang, general manager of Tengzhong Heavy industry, said: This time the acquisition of funds, mainly from the company's own funds and financing of financial institutions. According to the disclosure of information disclosed, Teng-zhong heavy industry by Sichuan Huatong Investment Holdings Limited ("Huatong") funds to form, huatong by the Li family Holdings, the main shareholder for Merrill Lynch, RuiSilver, Morgan Stanley and other Wall Street investment bank. This Huatong, is also full of mystery, its predecessor was founded ten years ago, Sichuan Province Hua Tuo Industrial Development Co., Ltd. ("Hua Tuo"). Hua had a 90% stake in Sichuan Eyebrow Salt Company, after the change of stock rights, Sichuan eyebrow Glauber's salt company became a holding subsidiary of Asahi Light Resources, and became one of the two assets on the market. As the first listed company in Huatong, Asahi Resources was listed on the Stock exchange of Hong Kong on June 16, and its chairman, Eon, has risen from about HK $1.658 billion to about HK $1.973 billion in the market value of the shares held by Xu Guang.　　Hua is also seeking an overseas listing, with Morgan Stanley buying a stake of less than 20% per cent for 80 million of billions of dollars, followed by a bond financing of $200 million trillion. From the above complex capital formation chain, it is not so much that Teng-zhong heavy industry is a company engaged in road and bridge machinery, chemical, wind energy machinery processing enterprises, rather it is more like a professional investment companies. Relying on strong foreign capital, Tengzhong has been involved in special vehicles, road bridge components, construction machinery, new energy, petrochemical equipment and other industries in the past three years. With the expansion of the industrial chain, its capital strength in the process has been well reflected, in 2007-2008 years, Tengzhong has acquired Guangyuan Construction Machinery Group, Xinjin Road Machinery Factory, and new Xinjin production base. For the domestic energy situation and future demand, Tengzhong Heavy Industries entered the field of energy equipment manufacturing in 2008. Currently, in addition to the outstanding Hummer acquisition Project, Tengzhong will also integrate Gansu Lantong machinery plant.　　Only its new Xinjin production base for example, the base of the total investment of 1.4 billion yuan, covers an area of 632 acres, after all put into production, total output value can reach 3 billion yuan. The acquisition of Hummer profitable for Tengzhong to sell Hummer, from the start is full of the taste of investment.　　The enterprise enters a strange domain, needs to have the sufficient capital to drive, but also has the sufficient means to evade the risk. This time, Tengzhong has bought Hummer's brand and technology, but it does not include the debt owed by Hummer and its parent company, General Motors. This avoids a legal dispute that arose during the Chrysler bankruptcy due to inconsistencies in the interests of all parties. On the other hand, the Hummer (HUMMER) to be acquired by Tengzhong is not a Hummer (Humvees) used by the U.S. military, but a civilian version of the military Hummer.　　It can also be said that the private background of Tengzhong, coupled with the stealth of American investment banks and the status of Hummer, makes the acquisition much less difficult than Lenovo's takeover of IBM's PC division and PetroChina's bid for Unocal. There is also a big difference between the auto sales markets in China and the United States. In the U.S. automotive market, after-sales service has become the most important and most stable source of income.　　But in China, car sales are surprisingly big. Take the cheapest Hummer h3x, for example, the car's North American official guidance price of 43910 U.S. dollars, according to the current exchange rate, about 300,000 yuan. This car, the domestic dealer's price is 760,000 yuan, thanUS official guidance prices are 2.5 times times higher. Take another look at Hummer's market: Hummer has sold less than 2000 vehicles a year in the Asian market and sold 543 vehicles domestically. There's an old business story, perhaps for Tengzhong to buy Hummer's behavior to make today's explanation: two people to a place in Africa to sell leather shoes, the first person to see the African people are barefoot, a big disappointment "these people are barefoot, how can buy my shoes?" So he went home, and the other man saw that the Africans were all barefoot and pleasantly surprised. "These people have no shoes to wear, there must be a big market here."　　So they tried to guide the Africans to buy leather shoes, and finally a big fortune. Tengzhong is clearly in the latter category. Despite a sharp contraction in hummer sales, From 2007 to 66,000 vehicles down to 2008 37,000, and then the first five months of this year, the cumulative sale of 5,113 vehicles, but from the Asian market, especially the domestic market performance, but is spring: 2006 domestic sales 218, 2007 344, 2008 543, average growth of more than 50 %。　　and SUV industry sales growth, for 20%~25%. Hummer at home or throughout Asia, are in the early stage of market development, the distribution of commodities display venues are not enough, narrow sales channels, the growth of its sales in Asia has undoubtedly been restricted. There is also a special factor, since the Zhongqing, led to the original part of the Sichuan Province Chang ' an automobile was classified into Chongqing, as the need for industry to stimulate the economy of the agricultural province of Sichuan, whether it is economic needs, or political performance needs, Hummer has a special meaning and temptation.　　Although the Hummer wears an "oil tiger" disgraceful hat, it is a rare opportunity to get a large scale car project. Back to see Tengzhong heavy industry, has been in the dump truck, cement pumps and other special vehicles have achieved some results, and Hummer's core technology, to improve the technical strength of tengzhong and the industry's height. Some of the finest features of Hummer itself, such as two-speed electronic control full time four-wheel drive system, chassis plate latch rocker control protection, fuel tank protection cover, air compressor automatic protection system, in the domestic leading position in the technology, can be in the car technology requirements of customers to find a broad market. For example, in the field of exploration with cars, cash carts, and even military vehicles, Hummer has a unique play stage. The domestic demand market is clearly there, as long as there is a wide range of sales channels and the flow of display venues, sales growth will become logical.　　After the completion of this acquisition, once the implementation of domestic Hummer, it can further reduce the cost of the entire vehicle production and sales costs, as long as the market to see, do not worry about no one to buy. In the current economic downturn, consumers will compress spending, especially on commodities. But the financial crisis will pass sooner or later, human good scars forget the nature of pain, as well as the desire to conquer the natural subconscious, have decided that SUVs and SUVs still have a broad market space. When both Chrysler and General Motors entered bankruptcy protection, they believed in the darkThen comes the dawn, perhaps the internal force of Tengzhong's determination to buy.