GM's Sale of Saab Fails; Swedish Brand to DieBy Michelle Krebs December 18, 2009
General Motors announced Friday its planned sale of Saab has failed, and the Saab brand will be eliminated, resulting in the loss of 3,400 jobs and 1,100 dealers globally.
After Swedish sports car maker Koenigsegg Group AB last month withdrew from negotiations for Saab, GM took up discussions with Dutch sports car maker Spyker Cars. The deal, which failed Friday morning, was considered a long-shot due to the short timeframe to close the deal -- GM set a Dec. 31 deadline. In addition, Spyker is a small and unprofitable company, plus financing in any deal is challenging in these times.
"Despite the best efforts of all involved, it has become very clear that the due diligence required to complete this complex transaction could not be executed in a reasonable time. In order to maintain operations, Saab needed a quick resolution," said GM Europe President Nick Reilly.
Now GM will "wind down" Saab, much as it is doing with Saturn and Pontiac. "This is not a bankruptcy or forced liquidation process," reminded Reilly. "Consequently, we expect Saab to satisfy debts including supplier payments, and to wind down production and the distribution channel in an orderly manner while looking after our customers."
In a statement to the Swedish News agency TT, Sweden's Enterprise Minister Maud Olofsson said: "It is very dismal. Very sad news for all of the employees and it comes at the worst possible time."
Meantime, GM said Saab will continue to honor warranties, while providing service and spare parts to current Saab owners around the world.
"We were so incredibly close," Spyker CEO Victor Muller said in a text message to Bloomberg News. "I have no words."
GM said in a statement issued Friday morning that certain issues arose that could not be resolved. In a call with media Friday, John Smith, GM vice president of Corporate Planning and Alliances, refused to discuss those issues, but his comments suggested Spyker had more issues with the deal than did GM or the Swedish government.
"No amount of additional time was going to overcome that so we felt it best to recognize when you are at a point of impasses and move on," he said.
Smith said GM was still in discussions as of this morning with the European Investment Bank for financing any sale of Saab. Smith said those negotiations were not a sticking point in the deal.
Last week, Saab announced that it had closed on the sale of certain Saab 9-3, current 9-5 and powertrain technology and tooling to Beijing Automotive Industry Holdings Co. Ltd. (BAIC). That sale will go forward.
Saab now joins Saturn and Pontiac of brands to disappear in this tumultuous year for the global auto industry and GM in particular. The sale of Hummer to a Chinese company is pending. Smith said that deal should not be affected by the failure of the Saab sale and the previous failure of the sale of Saturn to the Penske Automotive Group. -- Michelle Krebs, Senior Analyst and Editor at Large