GM 'Disappointed' at Termination of Planned Saab Sale

Nov. 24, 2009
Costly delays made the deal too uncertain said Koenigsegg

General Motors said on Nov. 24 it was "disappointed" that Swedish sports car maker Koenigsegg terminated a deal to buy its Saab brand. Swedish luxury carmaker Koenigsegg said it was giving up its bid to acquire Saab Automobile from its U.S. parent company General Motors, saying costly delays made the deal too uncertain.

"Many have worked tirelessly over the past several months to create a sustainable plan for the future of Saab by selling the brand and its manufacturing interests to Koenigsegg Group AB," GM CEO Fritz Henderson said. "Given the sudden change in direction, we will take the next several days to assess the situation and will advise on the next steps next week."

Koenigsegg announced in September that it had teamed up with Beijing Automotive Industry Holding Co Ltd (BAIC) to buy Saab from GM. But it still needed a 400-million-euro (US$600) loan from the European Investment Bank and wanted the Swedish government to act as a guarantor.

"We regret that after six months of intense and goal-oriented work we have come to the painful and difficult conclusion that we are not going to be able to carry out the acquisition of Saab Automobile," the head of the company, Christian von Koenigsegg, said.

Swedish media have suggested that Saab was running short of money to continue its day-to-day operations, and doubts have flourished among experts and commentators about whether Koenigsegg would have the necessary expertise to run a major car company.

Koenigsegg Group, founded in 1994, has just 45 employees and produces 18 high-end sports cars a year at more than a million euros (US$1.4 million) each. Saab, by contrast, employs 3,400 people in Sweden alone and sold just over 93,000 cars worldwide in 2008.

Koenigsegg initially announced its plan to acquire Saab in June, and the deal was originally expected to be concluded by the end of October but has been repeatedly delayed. The Swedish government, which has refused to take a stake in the struggling carmaker, as of Tuesday had still not decided whether to act as guarantor for the EIB loan.

"The time factor has from the beginning been critical for our strategy to breathe new life into the company. Unfortunately, delays in completing the deal have led to risks and uncertainties that prevent us from successfully carrying out our business plan for Saab Automobile," von Koenigsegg said.

Saab spokesman Eric Geers meanwhile said Koenigsegg's decision came as "a surprise."

The head of the influential IF Metall union at Saab, Paul Aakerlund, was dismayed by the news. "This is a heavy time for all of us," he said.

Under GM's stewardship spanning almost two decades, Saab rarely posted a profit and last year lost 3.0 billion kronor (US$ 341 million.)

While some 3,400 people are employed at Saab's factory in Trollhaettan, a town of 55,000 in southwestern Sweden, another 12,000 work for suppliers or subcontractors that directly rely on the automaker for their income.

David Cole, chairman of the Center for Automotive Research in Michigan, said today's announcement was "not that big a deal" for GM, suggesting it may find another buyer for Saab given how many cash-rich Chinese companies are jockeying for a position in the global auto industry.

A Chinese carmaker, Geely, is currently trying to buy Sweden's other carmaker, Volvo Cars, from its U.S. parent company Ford. Purchasing a relatively "cheap" European carmaker like Saab would provide both a foothold in key markets and the technology needed to compete, Cole said.

GM could also decide to hold on to Saab, as it did with German carmaker Opel, to further strengthen its European position, or shut it down, a view shared by a number of Swedish car industry analysts.

Copyright Agence France-Presse, 2009

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