June 2, 2009
CFIUS Filing for Hummer Deal?
OK, so GM went the way of Chrysler and filed for bankruptcy yesterday. Earlier this morning there was an announcement by GM’s management that it had entered into an MOU with a mysterious unidentified potential buyer for its Hummer division. Now, it’s leaked to the NY Times and Bloomberg (and just about everybody else in the world) that the buyer is Sichuan Tengzhong Heavy Industrial Machinery Company Ltd., based in Chengdu. They are offering to take the Hummer Division off GM's hands for $500 million in cash.
Of course, a few years ago sale of an automotive division that produces the civilian version of the military’s Humvee would have likely generated cries of outrage about threats to our national security. Remember Dubai Ports? Or how about Unocal-CNOOC? Well, with GM in bankruptcy those concerns are not likely to carry the day. That said, this transaction is a strong candidate for a voluntary CFIUS filing with the US Treasury. Given the nature of the business (vehicles manufacture with a potential military use) and the nature of the acquirer (News articles are murky about that. They say it's "privately" owned. Maybe.), this is precisely the type of transaction that should seek to make a filing. Worst case for GM would be that they announce this transaction and proceed along a path to closing only to have a Dubai Ports/Unocal-like flare-up kill this transaction.
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I'm not sure about national security concerns since military humvees are made by AM General Corp. of South Bend, Ind.
GM's vice chair was on CNN last night and, when asked why GM didn't disclose the buyer's identity, he couldn't recall a reason but was sure it wasn't "sinister." This is interesting, from a corporate governance perspective, that the vice chairman would claim he didn't know why they withheld the Chinese's buyer's name....
By the way, it's great to see this blog going again.
Posted by: AnonCorpLawyer | Jun 3, 2009 7:25:12 AM
True. There are likely few (if any) real national security concerns associated with this sale. As you note, Hummer doesn't even make the military version of the humvee. But then again, there were few real national security concerns associated with either the Dubai Ports or Unocal sale. That didn't stop Congress from basically going nuts. A voluntary CFIUS filing creates a safeharbor and reduces the possibility that those kinds of issues stopping (or slowing) the transaction from closing.
Posted by: Brian | Jun 4, 2009 3:12:05 AM