General Motors (MTLQQ) has announced to sell its Saginaw, Michigan-based Nexteer steering business to China-based Pacific Century Motors. Pacific Century Motors is a joint venture between Beijing-based auto components supplier Tempo Group and E-Town, the financing and investing arm of the Beijing municipal government.
None of the parties have disclosed the terms of the deal. However, some sources have revealed that the Nexteer Automotive unit will be sold for about $450 million.
In October last year, GM acquired the Nexteer steering manufacturing unit from its former subsidiary, Delphi Corp., as a part of the latter’s bankruptcy filings. Delphi was GM’s parts-making unit until it was spun off as an independent entity in 1999. However, GM planned to sell off the unit in order to concentrate on its four core brands: Chevrolet, Cadillac, GMC and Buick.
The new GM was formed after emerging from bankruptcy on July 10, 2009 through the acquisition of substantially all the assets and certain liabilities of Motors Liquidation Company or the old GM. The new GM retained the four core brands, along with most of its overseas operations, and dropped the Saturn, Saab, Pontiac and Hummer brands.
Nexteer has 22 steering and halfshaft manufacturing facilities, 6 engineering facilities and 14 customer support centers spread across North and South America, Europe and Asia. Its customers include Fiat SpA, Ford Motor Co. (F), Toyota Motor Corp (TM), Chrysler Group LLC and PSA Peugeot Citroen, apart from GM itself. It also supplies to some automakers in China, India and South America.
As part of the deal, Pacific Century Motors has agreed to honor the terms of Nexteer’s recently negotiated five-year labor agreement with the United Auto Workers union. It will also keep Nexteer’s headquarter in Michigan. The deal is expected to close by the end of the year.
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