Was HUMMER Sold for $80 Million?

One notable element of the news story from Gasgoo about the construction of a HUMMER production line in China was that it also put a value on what Sichuan Tengzhong Heavy Industrial Machinery Company paid for the HUMMER brand: 550 million yuan, or $80.5 million in US dollars.

While often acquisition values aren’t a good indicator of true transaction value since the deal may include assumption of liabilities, commitments to cover future costs, and so on, buying the HUMMER brand for under $100 million seems like a real deal. If the brand can be extended to new product lines, it might well open up worldwide markets for the acquiring firm.

The Wall Street Journal, in contrast, is quoting analysts as saying that the price is expected to be between $200 and $300 million in Tengzhong’s Hummer Bid Faces Chinese Regulatory Hurdles.

One interesting possibility: the WSJ notes that in China, provincial governments can approve overseas investments of up to $100 million, while above that value the central government must sign off. If Tengzhong was able to structure the deal in a way that the value was indeed $80.5 million, the firm might be able to bypass some of the regulatory steps required by a larger deal.