China's Pacific Century Motor Systems Corporation and General Motors have signed a deal for the sale of Nexteer Automotive, GM's steering business.
PCM, founded by the state-owned Beijing E-Town International Investment & Development Corporation and automotive manufacturer Tempo International Group, will maintain Nexteer's current headquarters and operations in Saginaw, Michigan.
The Chinese companies expect the acquisition to narrow the technical gap between China and the U.S., by bringing advanced steering technology to Beijing.
Zhang Boxu, managing director of the Beijing Economic and Technological Development Area, says there's a lot of growth potential in the capital's auto parts sector.
Zhang Boxu, Managing Director of BDA said "By signing the deal, Nexteer's technological knowledge and advancements can be transferred to China. And it could also boost the competitiveness of the Chinese auto industry."
Founded in 1906, Nexteer recorded 2.1 billion U.S. dollars revenue in 2008. It has 6,000 employees at 42 facilities throughout North and South America, Europe and Asia. The company develops electric power steering, hydraulic power steering, steering columns and driveline halfshafts. Its top customers include GM, Ford, Chrysler, Volkswagen and Toyota.
Robert J. Remenar, President of Nexteer said "With that technology base and customers around the world....it could serve to grow...The business with PCM will help us bring Nexteer to China, which we know that it's a huge growing market for every one and in particular for General Motors..."
GM has owned Nexteer since 1917, as its first parts manufacturing division. The auto giant put it up for auction in January.
E-Town and Tempo have spent the past six months working out the agreement with GM, and its global customers, suppliers and Nexteer management.
PCM says the deal will close in the fourth quarter this year.