Aug. 24 (Bloomberg) -- General Motors Co. may sign an agreement for the sale of the Hummer sport-utility vehicle business to a Chinese machinery maker this week, said two people familiar with negotiations.

Executives from prospective buyer Sichuan Tengzhong Heavy Industrial Machinery Co. based in Chengdu, China, are expected to arrive in Detroit early this week for more negotiations with GM, said the people, who asked not to be named because the talks aren’t public. An agreement could be signed and announced during the trip, one of the people said. It will be subject to U.S. and Chinese regulatory approval before it will take effect.

GM Chief Executive Officer Fritz Henderson is working to dispose of half of the automaker’s U.S. brands so the carmaker can focus on the four that remain. The company is eliminating the Pontiac brand, and deals are pending to sell its Saab brand to Swedish sports car maker Koenigsegg Automotive AB and Saturn to Penske Automotive Group Inc.

“Since early June, when GM announced that it reached a memorandum of understanding with Tengzhong for the potential sale of the Hummer brand, the parties have been in frequent discussions working closely to finalize a definitive agreement,” GM said in an e-mailed statement attributed to Hummer CEO Jim Taylor. “Negotiations continue to progress and the transaction will be announced upon the signing of the definitive agreement as soon as appropriate.”

GM won’t provide further specifics until the agreement is completed, the statement said.

“We are working through a process, we’ve been in frequent discussion to finalize a definitive agreement which will be announced as soon as appropriate,” said Tim Payne, a spokesman for Tengzhong.

The companies signed a memorandum of understanding for the sale of Hummer in June.

No Government Roadblocks

Regulators have not indicated any problems with the deal, the people said. The BBC reported in June, citing China National Radio, that the National Development and Reform Commission would block the sale on environmental grounds and because Tengzhong lacks expertise in passenger-car production.

The Ministry of Commerce has reached a consensus internally to approve the deal, the National Business Daily reported citing an unidentified ministry officer.

GM has said it is working with both governments to make sure they understand the deal and the benefits to all parties.

The Hummer division will remain based in the U.S., and is considering several U.S. locations for a headquarters, including the Detroit or Nashville areas, Taylor, 52, said in a June interview.

Separating from Detroit-based GM means Hummer must create corporate offices as it prepares to start building SUVs under Tengzhong’s ownership. Tengzhong would take on Hummer’s dealer accords and senior management.

Hummer will have 100 or fewer corporate employees and contract with GM for manufacturing, Taylor said. The sale will protect more than 3,000 U.S. jobs, the companies have said.

To contact the reporter on this story: Katie Merx in Southfield, Michigan, at kmerx@bloomberg.net; Stephanie Wong in Shanghai at swong139@bloomberg.net

Last Updated: August 23, 2009 23:12 EDT