CFIUS Is Not Alone: News from the Cross-Border Automotive Mergers & Acquisitions Front
It’s well to remember that CFIUS is not the only regulator of cross-border deals that affect U.S. businesses.
The Wall Street Journal’s Deal Journal on June 11 quoted Liu Shanwen, the CTO of Dongfeng Motor Group, who discussed Sichuan Tengzhong Heavy Industrial Machinery’s pending purchase of Hummer. Mr. Liu estimated the transaction has less than a 30% chance of being approved by China’s Ministry of Commerce. Hummer’s buyer does not have a high profile in China, and the Hummer product seems to be the opposite of the fuel-efficient automotive technology that the Chinese government is actively promoting. According to Automotive News, Sichuan Tengzhong is privately owned and manufactures heavy special-use vehicles, structural components for highways and bridges and construction machinery. Hummer’s management is optimistic about an enhanced product line after the deal closes later this year, including changes to current products.
Even if it were predictable that Chinese regulators would be less than enthusiastic with Hummer’s becoming a Chinese product, there may have been another Chinese contender for the purchase of Hummer—Beijing Automotive Industry, Daimler’s China partner. According to several reliable media sources, Beijing Automotive has also expressed interest in acquiring Volvo from Ford, having been unable to capture GM’s Opel unit. Beijing Automotive and Geely Automotive Holdings are reportedly in competition for Volvo. Geely, China’s biggest private automobile maker, had been mentioned as an interested purchaser of some of GM’s models. There is no indication yet whether China’s regulators will weigh in on the Volvo transaction.
Not to be outdone, even if in Chapter 11, GM too is looking to shed its Scandinavian unit, Saab Automotive AB. According to MarketWatch, a Swedish TV station has reported that Saab has agreed to be bought by Koenigsegg Automobile AB, a niche sports-car maker that employs only 45 full-time workers and produces only a few cars a year. The deal apparently has the backing of the Swedish government, which may be prepared to issue a loan guarantee to support Saab going forward. Unlike Beijing, there do not appear to be regulatory hurdles in Stockholm.
