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Koenigsegg backs out of Saab deal

Koenigsegg backs out of Saab deal

Published: 24 Nov 2009 17:02 GMT+01:00
Updated: 24 Nov 2009 23:11 GMT+01:00

A group headed by Swedish sports car maker Koenigsegg has broken off negotiations over the purchase of Saab Automobile, the prospective buyer has said.

"We regret that, after six months of intensive 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," said company chief Christian von Koenigsegg in a statement.

The collapse leaves thousands of jobs in western Sweden at risk - as well as the 4,000 people employed at the plant, many thousands of people work at Saab's suppliers. Tens of thousands around the world are employed in Saab dealerships.

Speaking to Swedish news agency TT, von Koenigsegg added that the deal had collapsed because it had taken too long to reach agreement:

"The way things look right now, we cannot complete the deal. The timeframe is unpredictable, there are too many processes that need to fall into place in parallel. Time has dragged on and not everyone has kept up.

"We have a business plan, but when Saab is bleeding and can't develop during this period of waiting the financial implications and the results of the of the business plan are very unpredictable.

"We had set an absolutely final deadline of 30th November and we saw today that there was no hope of getting a deal together by then. And after that we dare not believe in the plan. Too much time has passed."

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 a €400 million ($600 million) loan from the European Investment Bank and wanted the Swedish government to act as a guarantor.

Swedish media have recently suggested that Saab was 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 takes its name from sportscar maker Koenigsegg Automotive, which was founded in 1994, has just 45 employees and produces 18 high-end sports cars a year at more than a million euros ($1.4 million) each. Koenigsegg Automotive is a minority shareholder in Koenigsegg Group, with other shareholders including BAIC, von Koenigsegg's holding company Alpraaz and Norwegian businessman Bård Eker.

US businessman Mark Bishop, who was a shareholder when Koenigsegg Group was founded in June, is understood to have since sold his share in the company.

The Swedish government had as of Tuesday still not decided whether to act as guarantor.

General Motors said on Tuesday it was "disappointed" that Koenigsegg Group had terminated a deal to buy its Saab brand.

"We're obviously very disappointed with the decision to pull out of the Saab purchase," GM President and CEO Fritz Henderson said in a statement.

"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," 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."

GM said the proposed sale of its Swedish mark was "terminated at the discretion of the buyer."

Unions at Saab's plant in Trollhättan were surprised by the collapse of the agreement:

"This was very unexpected. I thought they'd come a long way in discussions with Koenigsegg and basically thought that the whole deal was completely sealed," said Håkan Danielsson, chairman of the local branch of Akademikerna, which represents white-collar workers at the factory.

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

"We'll see what happens now. It's up to GM," Geers said.

The head of the influential IF Metall union at Saab, Paul Åkerlund, 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 ($341 million at the time).

While some 3,400 people are employed at Saab's factory in Trollhättan, 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 the US state of Michigan, said Tuesday'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 US 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.

TT/AFP/The Local (news@thelocal.se)

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Your comments about this article

17:26 November 24, 2009 by Rick Methven
What now for SAAB?

I do hope that another buyer comes up soon
17:51 November 24, 2009 by Twiceshy
If there's no buyer, forget it. It most likely would be a money losing proposition for taxpayers to guarantee these loans, given the flagging sales of not just Saab but every other car maker.
17:59 November 24, 2009 by livinginsweden
Who are these so-called experts ....'doubts have flourished among experts and commentators about whether Koenigsegg would have the necessary expertise to run a major car company.'

GM screwed up not Koenigsegg... Koenigsegg cannot do worse than GM.

Well at least we dont ahve to worry about the Chinese stealing all the SAAB knowhow and secrets ....
18:04 November 24, 2009 by elkmtnman
So..... what about the other 26 potential buyers that were lined up last winter before the field got narrowed to 10 and then to 3, and finally the Koenigsegg selection. Maybe some of the front runners will want back in the bidding?

I'd hate to see the all new 9-5 die before it gets to the showroom floor because I really want to buy one!!
18:51 November 24, 2009 by Plowbridge
Koenigsegg were simply the 'devil we knew' but it's failure to provide financial transparency and it's lack of innovation in the business plan rightly prevented the tax payer from guaranteeing the Euro loan it required.

SAAB has to undergo a major downsizing if it is to survive as a going concern. It no longer has the brand or the market to produce the volume of vehicles it has been used to. Any potential new buyers will require co-operation to streamline the bleeding business if financial viability is to be attained.

For their part, the Govt and Unions must proactively set up redeployment and retraining programmes for the inevitable job losses instead of sitting on their hands waiting.

SAAB's future has been bleak for a considerable time now
19:55 November 24, 2009 by irishmark
Well I'd have to agree with Koenigsegg that the longer it has been drawn out, the less viable the purchase is - no-one's going to be buying whilst they can't be certain they'll still have a warranty in 6 month's time!

But ...I was also quite sceptical about Koenigsegg's abilities to run Saab. They are a great little business to have 45 people making a small number of premium hand-built cars - but when you have 4000 employees you are no longer hands-on making cars, you are managing people. There is a big difference.

I hope Saab do manage to find some sort of buyer and salvage some of the business, but I fear at best it is only going to be a much smaller niche manufacturer. The competition in Saab's sector these days is tough, and getting tougher all the time!
20:04 November 24, 2009 by krigeren
"von Koenigsegg added that the deal had collapsed because it had taken too long to reach agreement"

Gee.....business decisions taking too long in Sweden. Duh, its the Achilles heel of this country at a time when being decisive and executing given the world economic climate is part and parcel with competitive advantage.
20:18 November 24, 2009 by spy
Falcon

I hereby eat my hat.
21:50 November 24, 2009 by V70
Well...

Swedish Government...Yeah You...The Same Swedish Government

who said " We are not going to support Private Corporations..let alone

the Automotive Manufacturers"

Guess again..you inherited a immediate crisis..Massive Layoffs..

In addition to the Long Term Damage to Swedish Manufacturing..lost

wages..lost Tax Revenue..

Are you going to provide Christmas Goose..to the Thousands of

Employees.. who will be eliminated...
22:06 November 24, 2009 by Twiceshy
V70 what's the point of maintaining jobs in a company which bleeds money faster than a drunken sailor with terminal cancer on his last leave?

The laid off people will have their unemployment benefits to tide them over... which are cheaper than supporting a "charity factory" which loses money on every car sold.
22:39 November 24, 2009 by V70
Twiceshy..

Have you ever worked in a factory...hmm.. tell us..

Tide them over for what..how long ..how much tide..them over..

The Swedish People..will pay heavily to Tide..them over..then Pay to close factories..Then Pay to retrain..Please think before you comment..

It did not have to be this way.. Saab has a rich following throughout Europe

and the US.. They were very well respected as a smaller company..

They were not supported by GM either..
22:39 November 24, 2009 by AlbionKyle
SAAB never really make profit for GM in the past, who wants to buy it?

Love the quirky Swedish car design but they are so much more expensive than pricey German cars. And German cars drive better so, why buy Swedish?

I thought even freedom is socialized in Scandinavia, hehe, why not government bail out?
23:58 November 24, 2009 by falcon
Sell it to Merbanco. They wanted it and had experience. Management preferred them all along.

I said several times Koenigsegg was a lightweight.
01:32 November 25, 2009 by jack sprat
As I've posted a few times, I never did have much faith or trust in either the abilitiies or true intentions of this less than transparent outfit.

My guess is that they were wanting to be handed the loan money on a silver platter with very few firm guarantees or obligations on their behalf as to the future of the company.

Probably have a better chance of success with a big Eastern corporation, but its a big shame so much time has been wasted on these costly,dodgy dealings.
01:50 November 25, 2009 by 2394040
I would guess there are some very influential individuals who would like to see Saab closed, not downsized. I would say that the Chinese have a very good chance of ending up with Saab (or whatever bits and pieces they want) as well as Volvo.

In other words, there are a number of infulential individuals who were lying about their concern from the beginning of these talks. I was always suspicious of all the talk about a little outfit such as Koenigsegg wanting Saab in the first place.
03:18 November 25, 2009 by falcon
Spy

Join me in getting Saab into Merbanco's experienced and steady hands!

Falcon
06:18 November 25, 2009 by JoeSwede
Interesting theories... some very influential individuals not wanting to see SAAB remain open. Perhaps they see the end of the auto manufacturing era in Sweden and want to move on. A very hard nosed capitalistic attitude... let the weak companies die so that something else can emerge from its ashes...very ballsy and yet the welfare state continues. An interesting dynamic. Perhaps the cut-throut economic attitude with a true safety net will allow Sweden to evolve to the new, quicker. Be nimble, be quick...

I just don't know what comes next. A bunch of keebab places and a few programmers and fashion designers...is that enough? The only consolation is that the rest of the industrial world is facing similar issues.
07:27 November 25, 2009 by warriorwithin
''I just don't know what comes next. .... and a few programmers ........''

If the telecom companies want to sell their products to market with a billion customers they must also accept those programmers in their society as part of globalization
07:39 November 25, 2009 by Nemesis
GM has done the same in Germany at the exact same time.

This is nothing to do with Konigsegg.

Everyone who screwed this up was from the USA. The investor who pulled out of Konigsegg was from the USA and all people from GM involved were from USA.

In Germany, there is a good chance that the billions given to GM to keep it open while it tried to find a buyer will come back to haunt them.

Unfortunately the Swedish government has not got the backbone to go after GM and get back the money which it gave to GM.

Those of you who say Konigsegg could not have managed 4000 employee's, I believe they could have and should have been given a chance to do so.

Management layers are almost flat in Sweden, unlike in USA were managers are in the clouds, office wise and usuallyn mentally. It is a different type of corporate structure.

If GM closes the SAAB factory after deliberately screwing all the Euroepan deals to sell of production facilities, then they should pay back all aid ever given. In GM's caase in Europe that is literally in billions of Euro's or tens of billions of krona.
09:03 November 25, 2009 by usgepo
What secrets and know how going to the Chinese? if SAAB´s were so great they would have sold period, the fact is they are crappy cars.

Good thing the governement has not gone in and thrown good money after bad, Koenisseg is just as bad, they do not sell 18 cars a year, they struggle as well, two wrongs do not make a right!

The deal has been a pump and dump from the beginning, for the Koenisseg Group this deal as a get rich quick scam, they sale the little assets left after the take over and leave the tax payer and employee base holding the bag.
09:11 November 25, 2009 by heresneezeduck
Well the time has come to Saab.been a saab driver for over 35 years i fell sorry for the people that work in saab ...My first saab was bought for me by my father his words buy Swedish and keep a Swed in a job,maybe if the goverment did not give money to all the hair/fairy ideas of helping god knows who thay miht be able to help the things that make Sweden the country that i remember before i left....
09:32 November 25, 2009 by EtoileBrilliant
@usgepo Saab don't make crappy cars. They make cars which few people want to buy even at an artificially low price point.

@V70 Saab don't have "a rich following in Europe and the US" any more than a niche company like SsangYong which produces about twice as many vehicles)

The only possible solution for Saab is to go the way of Magna which is a sub-contractor for almost everything for mots of the world's car companies (Japanese excluded). This is not just a Swedish problem but a global one in which niche manufacturers have no place in the new world order.

Personally I'm glad the Koenigsegg bid fell through. The guy comes across as a charlatan waiting to rip off the Swedish taxpayer (a la the Phoenix bid for Rover cars). I may be wrong.

In fairness to GM, it never turned in a penny profit during its tenor. My money would be on the Wallenburgs buying it back with a few backhanders and soft loans from the Swedish government.
10:31 November 25, 2009 by bjinger
Saab is not a toy factory, what it has to offer to get Chinese investment when it going bankrupt. Be careful, chinese money!
11:10 November 25, 2009 by spy
falcon

What Saab needs right now is a group with the balls to pick this deal up by the scruff of the neck and move forward. Saab financially is in far better shape than it was at the start of the year. It has reorganized, reduced debt, lowered break even point plus I bet it has many of the conditions in place to be an independent company pretty quickly.. But time is Saab's enemy and no doubt they will be feeling beaten-up today and are uncertain of how they will be treated by GM. I am sure these Merbanco guys would be well received by Saab if they were to get involved.
02:18 November 26, 2009 by millionmileman
Having driven a million miles, in my 1989, 900 SPG, I feel like the best-man at the wedding and I am not sure if the groom did not show up, or was it the bride? The only certainty is that the shocked guests are assembled in the banquet hall, gazing at all the feast that has now spoiled with food-poisoning!
13:21 November 26, 2009 by Bumblebeetuna
Let's all pitch in and start a co-op investment firm and buy Saab Auto.
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