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Friday 27 November 2009
Saab nears end of the road with no bidders
General Motors Corp does not expect to find new bidders for Saab and may shut the bankrupt unit after Koenigsegg Group cancelled a planned acquisition, people familiar with the matter said.
GM board to decide fate after Koenigsegg deal fails
Bloomberg in Southfield 26 November 2009
General Motors Corp does not expect to find new bidders for Saab and may shut the bankrupt unit after Koenigsegg Group cancelled a planned acquisition, people familiar with the matter said.
Saab’s future would be decided at a December 1 GM board meeting, said the sources, who asked not to be identified because the talks are private. While the directors might opt to keep Saab, as they did with the Opel division this month, GM had a contingency plan that called for winding down the brand, the sources said.
“They should just get rid of it,” said Tom Stallkamp, an industrial partner at buyout firm Ripplewood Holdings, which was part of an unsuccessful bid for Opel in Germany. Saab “really doesn’t matter in terms of technology, and there is no synergy like there was with Opel”.
Closing Saab instead of selling it would still help GM achieve the goal of trimming its US brands to four from eight while working to return to profit after a government-backed bankruptcy. A Koenigsegg sale would have protected jobs at Saab while wrapping up GM’s affiliation with the brand by year’s end.
When that deal collapsed on Tuesday, it was the third brand sale to break down since GM’s July 10 exit from Chapter 11.
GM backed out of the Opel sale to a group led by Magna International, and Penske Automotive Group withdrew in September from a plan to buy Saturn.
The carmaker’s Saab contingency plan was modelled on its blueprint for Saturn, one of the sources said. Saab owners would continue to be covered by GM warranties and be assigned to a new dealership for service, the person said.
“We will take the next several days to assess the situation and will advise on the next steps next week,” chief executive Fritz Henderson said in a statement. “We’re obviously very disappointed with the decision to pull out.”
Earlier yesterday, Beijing Automotive Industry Holding, which agreed in September to take a minority stake in the investment team set up by Koenigsegg to take over Saab, said it would “cautiously” reconsider plans to buy a stake.
Saab had expected the transaction with Koenigsegg Group to close by the end of this month, pumping in fresh funds to finance a ramp-up of production of older models and introduction of new ones.
The investment group includes Koenigsegg Automotive, maker of the US$1.2 million CCXR sports car; Beijing Automotive Industry; and Baard Eker, a Norwegian entrepreneur. The team is led by Augie Fabela II, an American who co-founded Russian mobile-phone operator VimpelCom.
“We’re extremely disappointed. It’s like a plane crash,” Eker said. “Our deadline was November 30, and at one week away we realised that we had so far to go that we weren’t going to make it, so unfortunately we had to call it a day.”
GM began getting indications of a possible snag over the weekend, and Koenigsegg’s board decided on Monday to back away, one of the people said.
Koenigsegg had sought to obtain in advance all €400 million (HK$4.63 billion) of financing approved by the European Investment Bank, while the lender planned to disburse the funds in tranches, another person said. A spokesman for the bank could not be reached.
“That’s it, goodnight, goodbye,” said Stephen Pope, the chief global strategist for Cantor Fitzgerald. “Saab has reached the end of the road; there’s nothing left in the tank.”
Saab traces its roots to aircraft company Svenska Aeroplan, founded in 1937 to secure production of Swedish warplanes, and is based in Trollhaettan, a cradle of the country’s 19th-century industrialisation. GM bought half of Saab in 1990 and took full ownership a decade later.
Posting losses in most of its years under GM, Saab had planned to become profitable by 2012 with annual sales of 100,000 cars, according to Christian von Koenigsegg, one of the investors in the acquisition group.
Saab got Swedish court protection in February after GM said it was cutting ties.
Koenigsegg won the bidding for the unit in June, and the European Investment Bank approved a €400 million loan for Saab on October 21 after an initial delay. Saab had about 4,100 employees in August.
Koenigsegg’s rivals for Saab included US billionaire Ira Rennert’s Renco Group and Merbanco, a group of investors from Wyoming, a person familiar with the process said earlier.
An aide to Rennert said on Tuesday that the billionaire would not comment on Koenigsegg’s exit, and Merbanco’s president did not respond to a voice-mail message.
At Saab’s peak of popularity in the 1980s, it appealed to buyers who sought a European brand mixing safety, reliability and innovation. While Ford Motor’s Volvo championed practicality, Saab peddled its aviation heritage with turbo-charged engines and fighter-jet design elements.
Plunging demand and Saab’s losses made the unit a candidate for disposal as GM slid towards bankruptcy. US sales slumped 62 per cent in the year’s first 10 months, with just 513 deliveries last month, and the European total plunged 59 per cent. As of November 15, Saab planned to reduce its US dealership body by 37 per cent, cutting 81 of 218 dealers.
“I don’t think that the inventory levels on Saab are very high, so I would expect that dealers would get no new products and the company wouldn’t have to heavily discount them to sell off the remaining stock,” said Eric Ibara, the director of residual consulting for Kelley Blue Book.
Saab was among four US brands GM planned to unload as part of its restructuring to focus on Chevrolet, Buick, GMC and Cadillac. The Swedish unit has been unprofitable for most of the two decades GM has owned it.
2 comments:
Saab nears end of the road with no bidders
GM board to decide fate after Koenigsegg deal fails
Bloomberg in Southfield
26 November 2009
General Motors Corp does not expect to find new bidders for Saab and may shut the bankrupt unit after Koenigsegg Group cancelled a planned acquisition, people familiar with the matter said.
Saab’s future would be decided at a December 1 GM board meeting, said the sources, who asked not to be identified because the talks are private. While the directors might opt to keep Saab, as they did with the Opel division this month, GM had a contingency plan that called for winding down the brand, the sources said.
“They should just get rid of it,” said Tom Stallkamp, an industrial partner at buyout firm Ripplewood Holdings, which was part of an unsuccessful bid for Opel in Germany. Saab “really doesn’t matter in terms of technology, and there is no synergy like there was with Opel”.
Closing Saab instead of selling it would still help GM achieve the goal of trimming its US brands to four from eight while working to return to profit after a government-backed bankruptcy. A Koenigsegg sale would have protected jobs at Saab while wrapping up GM’s affiliation with the brand by year’s end.
When that deal collapsed on Tuesday, it was the third brand sale to break down since GM’s July 10 exit from Chapter 11.
GM backed out of the Opel sale to a group led by Magna International, and Penske Automotive Group withdrew in September from a plan to buy Saturn.
The carmaker’s Saab contingency plan was modelled on its blueprint for Saturn, one of the sources said. Saab owners would continue to be covered by GM warranties and be assigned to a new dealership for service, the person said.
“We will take the next several days to assess the situation and will advise on the next steps next week,” chief executive Fritz Henderson said in a statement. “We’re obviously very disappointed with the decision to pull out.”
Earlier yesterday, Beijing Automotive Industry Holding, which agreed in September to take a minority stake in the investment team set up by Koenigsegg to take over Saab, said it would “cautiously” reconsider plans to buy a stake.
Saab had expected the transaction with Koenigsegg Group to close by the end of this month, pumping in fresh funds to finance a ramp-up of production of older models and introduction of new ones.
The investment group includes Koenigsegg Automotive, maker of the US$1.2 million CCXR sports car; Beijing Automotive Industry; and Baard Eker, a Norwegian entrepreneur. The team is led by Augie Fabela II, an American who co-founded Russian mobile-phone operator VimpelCom.
“We’re extremely disappointed. It’s like a plane crash,” Eker said. “Our deadline was November 30, and at one week away we realised that we had so far to go that we weren’t going to make it, so unfortunately we had to call it a day.”
GM began getting indications of a possible snag over the weekend, and Koenigsegg’s board decided on Monday to back away, one of the people said.
Koenigsegg had sought to obtain in advance all €400 million (HK$4.63 billion) of financing approved by the European Investment Bank, while the lender planned to disburse the funds in tranches, another person said. A spokesman for the bank could not be reached.
“That’s it, goodnight, goodbye,” said Stephen Pope, the chief global strategist for Cantor Fitzgerald. “Saab has reached the end of the road; there’s nothing left in the tank.”
Saab traces its roots to aircraft company Svenska Aeroplan, founded in 1937 to secure production of Swedish warplanes, and is based in Trollhaettan, a cradle of the country’s 19th-century industrialisation. GM bought half of Saab in 1990 and took full ownership a decade later.
Posting losses in most of its years under GM, Saab had planned to become profitable by 2012 with annual sales of 100,000 cars, according to Christian von Koenigsegg, one of the investors in the acquisition group.
Saab got Swedish court protection in February after GM said it was cutting ties.
Koenigsegg won the bidding for the unit in June, and the European Investment Bank approved a €400 million loan for Saab on October 21 after an initial delay. Saab had about 4,100 employees in August.
Koenigsegg’s rivals for Saab included US billionaire Ira Rennert’s Renco Group and Merbanco, a group of investors from Wyoming, a person familiar with the process said earlier.
An aide to Rennert said on Tuesday that the billionaire would not comment on Koenigsegg’s exit, and Merbanco’s president did not respond to a voice-mail message.
At Saab’s peak of popularity in the 1980s, it appealed to buyers who sought a European brand mixing safety, reliability and innovation. While Ford Motor’s Volvo championed practicality, Saab peddled its aviation heritage with turbo-charged engines and fighter-jet design elements.
Plunging demand and Saab’s losses made the unit a candidate for disposal as GM slid towards bankruptcy. US sales slumped 62 per cent in the year’s first 10 months, with just 513 deliveries last month, and the European total plunged 59 per cent. As of November 15, Saab planned to reduce its US dealership body by 37 per cent, cutting 81 of 218 dealers.
“I don’t think that the inventory levels on Saab are very high, so I would expect that dealers would get no new products and the company wouldn’t have to heavily discount them to sell off the remaining stock,” said Eric Ibara, the director of residual consulting for Kelley Blue Book.
Saab was among four US brands GM planned to unload as part of its restructuring to focus on Chevrolet, Buick, GMC and Cadillac. The Swedish unit has been unprofitable for most of the two decades GM has owned it.
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