UPDATE 3-GM sells steering unit to Chinese firm

* GM sells Nexteer Automotive, former Delphi steering unit

* Deal with Beijing-backed group set to close by end-2010

* Nexteer has 6,200 employees, 22 manufacturing facilities

* Analyst expect more Chinese oversea auto parts buys
(Adds analyst comment, detail on pricing)

By Soyoung Kim

DETROIT, July 8 (BestGrowthStock) – General Motors Co [GM.UL] said
on Wednesday it will sell its Nexteer Automotive unit to a
China government-backed group, as GM focuses on its core car
business while the Chinese look to bolster their global
competitiveness.

GM said it reached a definite agreement to sell the maker
of steering systems to Pacific Century Motors, a joint venture
between Chinese auto parts supplier Tempo Group and the
financing and investing arm of the Beijing municipal
government.

Financial terms of the deal were not disclosed but some
media reports have put the value at around $450 million.

GM, which is planning to file for a near-$20 billion IPO in
the coming weeks, aims to close the deal by the end of the
year, pending regulatory approvals.

GM had been looking to sell Nexteer after it bought the
business in October from Delphi, its former parts subsidiary,
under a deal to support Delphi’s reorganization in bankruptcy.

Nexteer, based in Saginaw, Michigan, has about 6,200
employees and 22 manufacturing facilities in North and South
America, Europe and Asia. Its global revenues topped $2 billion
in 2008.

“The sale of Nexteer supports our objective to focus on our
core auto business and is the final step in our efforts to
position Nexteer as an independent supplier,” said Steve
Girsky, GM vice chairman in charge of corporate strategy.

Zhao Guangyi, chairman of Pacific Century Motors, said the
deal would provide Nexteer with new growth opportunities and
greater access to the Chinese auto market, now the world’s
largest.

The move follows Geely Automobile Holdings’ (0175.HK: ) $40
million takeover of Australian gearbox maker Drivetrain Systems
International last year, and marks the latest acquisitions of
overseas parts assets by ambitious Chinese firms looking to
transform themselves into global players, analysts said.

“Acquisition of parts assets is a more expedient way to
improve the overall quality of made-in-China cars than the
takeover of a foreign brand. I expected to see more cross
border parts deals down the road,” said Lin Huaibin, an analyst
with IHS Automotive.

Geely’s parent is also in the process of buying Ford
Motor’s (F.N: ) Volvo car unit, a move that has raised eyebrowns
of some industry observors questioning the Chinese car maker’s
ability to turn around the prestigous but money-losing brand.

Neither Pacific Century Motors or Tempo Group could be
reached immediately.

Nexteer Automotive’s customers include GM, Fiat SpA
(FIA.MI: ), Ford Motor Co (F.N: ), Toyota Motor Corp (7203.T: ),
Chrysler Group LLC, PSA Peugeot Citroen (PEUP.PA: ), as well as
automakers in India, China and South America. Sales to GM
account for almost half of its sales.

The new Chinese owner said it would honor the terms of
Nexteer’s recently negotiated five-year labor agreement with
the United Auto Workers union. The agreement includes adding
new jobs in Saginaw.

Robert Remenar will remain president of Nexteer.

Investment bank Moelis & Company acted as financial adviser
to Pacific Century Motors.
(Additional reporting by David Bailey in Detroit, Fang Yan in
Shanghai and Alison Leung in Hong Kong; Editing by Steve
Orlofsky and Lincoln Feast

UPDATE 3-GM sells steering unit to Chinese firm