Sweden's Koenigsegg, maker of some of the world's most expensive sports cars, has struck a deal to buy loss-making Saab Automobile from General Motors, the companies said on Tuesday.
In one of the most unlikely pairings in automotive history, the tiny sports car firm of 45 staff is expected to take over a company that employs around 3,400 staff, a cherished Swedish brand that became a national icon for stability and reliability.
A Saab 9-X Convertible Concept is displayed during the first
public day of the 79th Geneva Car Show at the Palexpo in
Geneva, March 5, 2009. Reuters/Arnd Wiegmann
GM Europe said on its website the deal included an expected $600 million of financing from the European Investment Bank, which would be guaranteed by the Swedish government.
Other terms were not disclosed.
Additional support is to be provided by GM and Koenigsegg Group AB to fund Saab's operations and product program investments. This includes plans to launch several new products that are in the final stages of development, GM Europe said.
Like its U.S. parent, Saab has been in bankruptcy protection and GM Europe said the accord was a milestone in the Swedish company's effort to emerge from the process.
Koenigsegg, which produces some of the world's most powerful roadcars, costing around $1 million, came out of nowhere to emerge as a front-runner to buy Saab.
But analysts are skeptical a tie-up makes sense, noting that Christian von Koenigsegg, founder of the firm bearing his name, has no evident experience in owning or running a firm as big as Saab.
Last year Koenigsegg made 18 cars, a number that Saab churns out in a couple of hours.
There are no economies of scale between Saab and Koenigsegg. This is a constellation of buyers that probably have different interests than GM, which was driven by volume, said Mikael Wickelgren, an automotive expert at Skovde University, in southwestern Sweden not far from Saab's headquarters.
This will be a business where one would assume that the owners want to chisel out a personality for Saab. The logic would be in the special and unique. Otherwise I cannot understand this deal.
TWO DECADES UNDER GM
The deal would see Saab, which was put up for sale earlier this year, emerge from two decades under the umbrella of its U.S. parent.
Financing will be a key issue.
Saab has said it needs $1 billion to help it overhaul production and launch new models while absorbing expected losses of about 3 billion Swedish crowns ($382 million) this year.
An EIB official said the bank had not yet decided whether to move ahead with the project and that its board needed to have key information some six weeks before a meeting.
That means we will not be able to have it ready before the meeting in July, and the next meeting is in September, said Mats Gunnarsson, senior adviser to the EIB management committee.
Sweden similarly said the issue of support remained unclear.
We do not yet know if Koenigsegg group will need loan guarantees or not, Joran Hagglund, state secretary for Sweden's industry ministry, told Reuters.
Nonetheless, Industry Minister Maud Olofsson welcomed the news as did Saab union representatives.
It is good that the owner situation now is becoming clear, Olofsson said. The minister said in a statement that Saab staff and other residents in the town of Trollhattan, where Saab is headquartered, had been waiting for just such news.
Olofsson separately told Swedish news agency TT that a key criterion was that production remained in Sweden.
Saab Automobile had been in talks with two or three bidders in recent weeks.
Christian von Koenigsegg, who founded Koenigsegg 15 years ago when he was 22, was until recently seen as an unlikely suitor. He is known in the industry as a technology-focused car enthusiast as opposed to a businessman.
Koenigsegg has financial backing from Norwegian entrepreneur Bard Eker, who owns 49 percent of the car maker.
Saab's sales comprised just over 1 percent of GM's total sales volume last year. It has been hit hard by the economic downturn that has savaged sales on both sides of the Atlantic.
The Saab Automobile/IF Metall workers' union welcomed the news. We're not negative to this. We think it is good that this finally got its solution, union representative Paul Akerlund told Reuters.
($1=7.850 Swedish crowns)
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