The automobile industry has been full of activity since the financial crisis sent motor companies tumbling into distress. Geely recently announced its bid for Ford’s Volvo unit, MAN Group bought over 25% of Sinotruk, and most notably Sichuan Tengzhong acquired the Hummer brand.

Local companies continue to search overseas for distressed motor companies to buy. The latest acquisition is that of Delphi Ride Dynamics and Brakes’ assets by Shougang Corporation. This transaction marks the first deal involving a Chinese state-owned company’s acquisition of American assets that was granted approval by the Committee of Foreign Investment in the US under President Obama’s administration.

Reorganising under bankruptcy court protection from creditors, Delphi has been battered by weak sales since General Motors spun it off a decade ago. The industrial giant lost US$4.8bn last year and has resorted to selling US$100m worth of assets to investors led by the steelmaker.

Many companies in the US have had to sell their assets and both state-owned and private companies have been snapping them up. “We are seeing more Chinese companies interested in investment in the US, particularly in two areas – acquisitions out of bankruptcy and acquisitions of new energy assets,” said Xiao Yong, a partner of Vinson & Elkins.

“The deal was very complex because Delphi’s assets were located in multiple jurisdictions – including Mexico, Britain, France, India, China, Japan and the US – which involved a great deal of coordination,” he said.

Shougang is Beijing’s largest employer and one of China’s largest steelmakers. As Shougang’s long-term legal advisor, Vinson & Elkins has advised the company on many natural resources acquisitions in Peru, Australia and Mongolia. The firm was the lead advisor in this transaction and coordinated 11 local counsels to advise the clients. Vinson & Elkins recently advised China Investment Corporation on its debut investment worth US$939m into Kazakhstan’s petroleum sector.

Both deals were led by Beijing-based partners Xiao Yong and Paul Deemer.

Firms that advised Shougang Corporation

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• Shearman and Jun He drive Hummer to China
• CIC turns to Vinson & Elkins for Kazakhstan encounter