The potential buyer of General Motors Corp's Hummer division will begin formal talks with Chinese regulators on Monday in an effort to win approval for its acquisition, The Wall Street Journal reported on Saturday.
China's Sichuan Tengzhong Heavy Industrial Machinery has agreed to buy the Hummer brand from the bankrupt U.S. automaker but state radio in China reported on Thursday that the country's top economic planning agency was likely to reject the bid.
A GM spokesman was not immediately available to comment on the Journal report while a Tengzhong spokeswoman said the Chinese company is working to get the deal done.
We don't have a definitive agreement but we're developing our proposals with GM and Hummer and we'll continue to engage with the appropriate authorities in the appropriate manner, said Christina Stenson of the Brunswick Group, the public relations agency for Tengzhong.
Tengzhong's lack of experience and the gas-guzzling nature of Hummer's sport utility vehicles were cited as reasons for the expected opposition by the National Development and Reform Commission, the report said.
However, GM and Tengzhong have yet to formally present the deal to the Chinese regulators and the parties negotiating the deal have not been told it is in trouble, the Journal said, citing unidentified sources.
The Journal quoted one unidentified GM executive as saying talk that the deal would be blocked was not true and should be considered pure speculation.
Executives from GM and Tengzhong met this week to firm up their plans and are operating under the assumption that the deal has a reasonable chance of getting approved, according to people familiar with the meeting, the Journal said.
GM said on June 2, the day after filing for bankruptcy, that it had tentatively agreed to sell the Hummer brand to Tengzhong, saying it expected the deal to close in the third quarter. GM officials said at the time that they saw no snag in closing the deal.
Based in the Chinese province of Sichuan, Tengzhong makes special-use vehicles, highway and bridge structural components, construction machinery and energy equipment.
(Reporting by Ben Klayman; Editing by Bill Trott)