* GM says could not complete deal to sell Hummer to China
* Tengzhong says Beijing rejected its bid to buy Hummer
* Closure puts about 3,000 jobs at stake (Recasts first sentence, adds details on Hummer, GM comments,reasons for Beijing rejecting the deal)
By Soyoung Kim and David Bailey
DETROIT, Feb 24 (Reuters) - General Motors Co [GM.UL] willwind down its iconic but tarnished Hummer brand after Chineseregulators rejected a $150 million bid by an obscure Chinesemachinery maker to buy the money-losing SUV line.
GM had been trying to complete the deal by the end ofFebruary after reaching a definitive agreement in October tosell Hummer to Tengzhong, a little-known heavy machinerycompany based in Sichuan province.
The collapse of the deal represents another setback for GM,which had been working to shed unprofitable brands and focus onits four core brands -- Chevrolet, Cadillac, Buick and GMC --after emerging from bankruptcy in July.
Closure of Hummer would put about 3,000 jobs at stake,including manufacturing workers, dealers, staff members, andother areas, GM spokesman Nick Richards said. The brand has 153U.S. dealers.
A brand that grew out of the U.S. military multipurposevehicle known as the Humvee produced by AM General, Hummer waslauded early on for a tough image but became synonymous withgas-guzzling excess when consumers became more interested inhigh oil prices and environmental responsibility.
GM bought the Hummer brand from AM General in 1999 and wenton to produce several civilian models.
"We have considered a number of possibilities for Hummeralong the way, and we are disappointed that the deal withTengzhong could not be completed," John Smith, GM vicepresident of corporate planning and alliances, said in astatement.
"GM will now work closely with Hummer employees, dealersand suppliers to wind down the business in an orderly andresponsible manner," Smith said.
Tengzhong, in an emailed statement to Reuters, said it andGM have decided to terminate the agreement after failing to winChinese regulatory approval within the proposed time frame.
"Tengzhong worked earnestly to achieve an acquisition thatit believed to be a tremendous opportunity to acquire a globalbrand at an attractive price," the company said.
Industry experts and sources with knowledge of thesituation told Reuters Tengzhong had faced questions in Chinaover how a little-known heavy machinery maker with nointernational experience could buy and turn around a strugglingforeign brand like Hummer.
Many also said that regulators might balk at letting aChinese firm acquire a U.S. brand known for making gas-guzzlingvehicles at a time when China was emphasizing the developmentof more environmentally friendly technologies.
The privately owned Tengzhong was formed in 2005 throughseveral mergers and has fewer than 5,000 employees.
THIRD FAILED SALE BY GM
GM said it will continue to honor warranties and provideservice support and spare parts to current Hummer owners.
This marks the third sale of a GM brand that has fallenthrough or been abandoned by the automaker, which wasrestructured in bankruptcy last year, backed by some $50billion in U.S. taxpayer funding.
A tentative deal reached by GM to sell its Saturn brand toPenske Automotive Group Inc (PAG.N) also collapsed at the endof September, just before it was expected to close.
GM also scrapped a plan to sell its Germany-based Opel unitto a group led by Magna International (MGa.TO) last year.
The wind-down of Hummer is expected to take several monthsand GM will continue to entertain viable offers early in theprocess, Richards said.
GM has not built any new Hummers at its plant inShreveport, Louisiana, since mid-January and currently hasabout 2,500 vehicles in dealer inventory.
The Shreveport plant continues to build the GMC Canyon andChevrolet Colorado mid-sized trucks.
GM put Hummer up for sale initially in summer 2008, a fullyear before the automaker fell into a government-supportedbankruptcy reorganization in which it planned to divest Hummer,Saturn, Saab and a controlling stake in Opel.
Hummer"s U.S. sales have plunged to just above 9,000 lastyear from nearly 56,000 in 2007. About two-thirds of its saleshave been in the United States and one-third internationally. (Reporting by Soyoung Kim and David Bailey, editing by MatthewLewis)
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