GM May Block Saab Sale to Chinese Firms
The sale of Saab to two Chinese firms may be blocked by General Motors Co. on the ground that it would adversely impact its interests in China. GM’s say-so in the matter is based on ownership of the technology used to produce two of Saab’s key models.
“GM would not be able to support a change in the ownership of Saab which could negatively impact GM’s existing relationships in China or otherwise adversely affect GM’s interests worldwide,” said GM spokeswoman Renee Rashid-Merem.
Saab is one of four brands GM sold or shut down as it restructured during its 2009 Chapter 11 bankruptcy process.
In a surprising reversal of his earlier position, Saab chairman Victor Muller agreed at the end of October to sell the Swedish automaker to Pang Da Automobile and Zhejiang Youngman Lotus Automobile for €100 million ($142 million). Earlier that same week Muller had announced his intention to back out of a deal under which the two Chinese firms were to provide about $350 million in investments.
Under the proposed sale the Chinese firms would buy 100% ownership of Saab with the proviso that they would invest an additional €500 million ($700 million) to allow Saab to complete its reorganization in bankruptcy court and emerge as a functioning business. Muller has also agreed to stay on as Saab CEO until a new CEO is appointed. The €100 million will be paid in installments.
The memorandum of understanding on the purchase deal will remain valid until Nov. 15, provided Saab stays in reorganization.
The deal has “secured the future of Saab,” Muller told Sweden’s Sverige Radio, adding that Saab can now pay its creditors, restart production, launch new models and expand into China.
The agreement is subject to approval by the Chinese government as well as Swedish authorities as well as a formal agreement by the boards and shareholders of both Saab owner Swedish Automobile and the two Chinese firms.
After Saab went into bankruptcy for the second time in September Youngman and Pang Da had agreed with Swedish Automobile to take a combined 53.9 percent stake for 245 million euros ($340 million). Since then the Chinese firms began maneuvering the deal toward an outright purchase. That effort had been quashed by Muller as recently as this Wednesday when he said the deal with the Chinese firms had lapsed due to their refusal to provide the bridge financing necessary to complete the restructuring.
At the time Muller appeared to be looking for $70 million in financing from U.S. private equity firm North Street Capital to which he had sold his custom sports car maker Spyker Cars for €32 million ($43.5 million) in September.
GM is China’s largest carmaker through its stake in a joint venture with a China’s SAIC. Any use of GM technology currently licensed to Saab by its prospective Chinese owners could impinge on the interests of GM’s China joint venture as Saab would presumably be produced in China.
Earlier this year GM has built the 9-4X for Saab in Mexico.
Saab’s US sales fell from 49,000 in 2003 to 5,800 in 2010 when its sale to Muller’s Swedish Automobile was completed. Through this October Saab has sold 4,984 cars in the US. The US currently has about 300,000 of the 1.5 million Saabs on the roads worldwide.