Teng medium-heavy in the acquisition of Hummer

Is similar to a successful marriage, failed marriage, then each have their own misfortune .

Began last year Teng private enterprises in Sichuan Heavy Machinery Co., Ltd. (hereinafter referred to as the Heavy-teng) attempted to marry a wealthy woman left - the U.S. subsidiary of General Motors, Hummer that a marriage, somewhat like the field "farce", which will eventually Teng ended in heavy industry to withdraw.

The early morning of February 25, Teng in heavy industry, offshore company announced that without the support of the Chinese regulatory authorities, will terminate acquisition of the U.S. subsidiary of General Motors Hummer business.

The two companies had planned to the end of February before the Chinese Lunar New Year Lantern Festival which is to complete the transaction. At one time, Teng in the Heavy side also expressed the hope that through the establishment of offshore companies in the form of transactions to avoid the Chinese government's approval and ultimately unable to do so.

In the statement, in Heavy Teng said, "to respect this result, but can not complete this transaction are very sorry." Teng Yang Yi, general manager of Heavy Industries declined to comment further on the phone, loss of emotional obvious.

Almost at the same time cancel the deal, General Motors announced that it will start off Hummer business process. This shows from another angle, to give up the acquisition Hummer, for Teng may not be one of Heavy Industry is the worst outcome.

Blocked approval

Although Lang affectionate concubine interested in, but from the beginning, the marriage would not be "parents" or be "friends" optimistic.

June 3, 2009, Teng in the Heavy and General Motors announced that they have acquired the Hummer brand to reach a memorandum of understanding. Prior to that, even in the field of heavy machinery, Teng Ji Ji in heavy industry is also unknown, but has never been involved in automotive manufacturing. News, people doubt that both the company's motives, do not believe in their ability to raise 150 million U.S. dollars acquisition of funds, but more suspect after the completion of its acquisition of cross-border operation capacity.

In accordance with the Chinese government foreign investment regulations, the transaction value of more than 100 million U.S. dollars in overseas investment projects that require the same time, the State Development and Reform Commission, Ministry of Commerce and the State Administration of Foreign Exchange approval. July 15, 2009, the National Development and Reform Commission officials in charge of the Foreign Investment Department, said Teng in the Heavy Industries has received applications for acquisition of Hummer.

However, a month after the August 27, the National Development and Reform Commission as "the acquisition does not involve the Hummer localization does not belong to the scope of Development and Reform Commission for approval," returned the grounds that the vetting of applications, the proposed change by the business department.

The Ministry of Commerce is responsible for approving foreign investment projects of a source, at the national Development and Reform Commission for approval to return the application, Tang met with the representatives of the Heavy Industries, a vice mayor of Deyang City, Sichuan Province, together with the approval of the Ministry of Commerce issues a transaction. But since then has not submitted the application. Until the transaction announced the cancellation of the day before the February 24, 2010, Assistant Minister of Commerce Wang Chao at a regular press conference is still said that the Ministry of Commerce has never received a formal application, so there is no "veto applications do."

Are familiar with the government approval process have pointed out that among the different ministries, "pass the buck" has demonstrated the difficulty of the deal through.

National Development and Reform Commission an internal person to the reporter that in recent years, the State Development and Reform Commission for approval of large-scale projects, one in accordance with national industrial policy to promote energy-saving emission reduction, while the Hummer of large displacement, high fuel consumption, claiming its 3.5-liter displacement is usually above the trend inconsistent with the energy-saving; second is to encourage the industry pacesetter bigger and stronger through mergers and acquisitions, but out of M & A failure may have a negative impact to the Chinese government's point of view, the National Development and Reform Commission does not support enterprises cross-industry acquisitions. Prior to that, Blue Star Group's acquisition of Ssangyong blocked one of the reasons is its main industry is engaged in chemical industry, has never set foot in the automotive sector.

The National Development and Reform Commission insiders said the acquisition of Blue Star Group, out of South Korea's Ssangyong Motor trade, China's largest automaker SAIC successfully shares, but subsequently failed integration, making the Government's approval of China's auto companies more overseas acquisitions careful not to say that Tang in the Heavy Industry experience in the automotive industry so there is no enterprise.

Acquisition of doubt

Even in Heavy Teng access to the approval of government departments to support its funding sources and operational capabilities, but also has been plagued by market doubts.

Reached a memorandum of understanding with General Motors, the Tang in the heavy industry once claimed that domestic banks have already received financial support. However, Teng familiar with the investment in heavy industry to industry sources, the Heavy Teng otherwise acquire sources of funding.

The actual controller in Heavy Teng Sonam Dorji, speaking with a heavy accent, Zigong, Sichuan, for others shy and low profile, but the special relationship in the local business community, known as "god." His close relationship with Chengdu in the local army, a case in point is usually out of its usual two cars, which is behind a bodyguard, two cars were hanging the Chengdu Military Region licenses.

With regard to relations with the military, Sonam Dorji received purchase orders from the army promised. He has hand stamped material, to seek funding from other investors, and plans to advance orders for the acquisition of funds.

However, including Bank of China, including domestic bank has not given him financial support. Subsequently, Teng Heavy changed in support for foreign banks, but also without success.

Financing is unfavorable, the approval is meet resistance. February 24, 2010, in the Ministry of Commerce officials once again stand in the heavy industry has not received the application materials Teng when the Tang in the Heavy Industry insiders have said Proton will not easily give up the acquisition of Heavy Hummer will be through the establishment of offshore companies ways to continue to buy.

However, many of the legal profession are to the reporter, said Teng in the heavy industry through the establishment of offshore companies want to bypass the government's approval, there are two major obstacles.

First of all, the establishment of offshore companies must pass the Chinese Ministry of Commerce approval, if the funds from domestic, but also the SAFE approval. Dacheng Law Firm an attorney familiar with the Ministry of Commerce approval process to the reporter, said Guo Jing-Yi in 2008, after the incident, the Ministry of Commerce of China was established for the approval of overseas offshore companies more stringent.

Second, even setting up directly in the foreign offshore company, funded from domestic resources, but as long as the offshore company's controlling shareholder is the Chinese companies still need government permission. U.S. international law firm Baker & McKenzie in China Chief Representative JIA Dian-an explanation to the reporter, even though on the establishment of Chinese citizens overseas offshore companies are not specified, but generally will take into account the relevant provisions of corporate governance.

Since June 2009 announced the acquisition of interest since the Tang in the heavy industry has been unable to explain the acquisition of sources of funding. The legal profession, said the status quo from the approval of view, through the establishment of Proton in the Heavy intended acquisition of Hummer in the form of offshore companies, is basically impossible.