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GM halts sale of Saab to Chinese firms

TT/AFP/The Local · 8 Nov 2011, 07:03

Published: 07 Nov 2011 17:45 GMT+01:00
Updated: 08 Nov 2011 07:03 GMT+01:00

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Saab's former owner GM said it objects to the sale of technology licences for the Saab 9-3, 9-5, and 9-4X models to China's Pang Da and Youngman, which together have agreed to purchase Saab for €100 million ($142 million) from current owners Swedish Automobile.

"Although General Motors is open to the continued supply of powertrains and other components to Saab under appropriate terms and conditions, GM will not agree to the continuation of the existing technology licenses or the continued supply of 9-4X vehicles to Saab following the proposed change in ownership as it would not be in the best interests of GM shareholders," GM spokesperson James Cain said in a statement.

The 9-4X is based on GM's Cadillac SRX, and the two models share looks, an assembly line and key components.

Speaking with the TT news agency, Cain said the decision to withhold the licenses was final.

“This wasn't an easy decision for us to make. And it's final,” he told TT.

According to Cain, the decision stems from concerns about allowing GM technology to fall into the hands of competitors.

“This concerns both China and other markets,” he said.

Eddie Chen, head of the China division for Sweden's investment promotion agency, Invest Sweden, has been deeply involved in Saab's negotiations with Pang Da and Youngman.

But he was unaware that GM might say no to the sale of its technology licenses.

“I haven't heard anything because GM and Pang Da and Youngman haven't been in contact with one another yet,” he told TT.

He was also uncertain what affect GM's refusal to sell the licences might have on the sale of Saab.

"We have to go back to the drawing board," Saab chair Victor Muller told the Reuters news agency.

He suspected that GM's joint ventures in China are the reason for the US automakers objections.

"It's clear that GM is concerned that their technology will be used in China to compete with their joint ventures," Muller said to TT.

Anette Hellgren, chair of the Saab branch of the Unionen labour union, wants to know immediately from Saab management what Monday's news from GM means for the planned sale of Saab.

“I've got the impression that there are several steps about which decisions need to be made in this day and that this is one of them,” she told TT regarding the sale of technology licenses to the Chinese firms that want to take over Saab.

According to Hellgren's understanding of the deal, the sale of the licenses to which GM is now objecting, is a condition of carrying out the deal.

On Saturday GM indicated it may block the sale of Saab to two Chinese companies over concerns about its supplier relationships with Saab but that it was “very much open" to additional discussions about the deal.

"Given the time that has passed since the transaction was announced, we felt it necessary to communicate our position at this point in time," Cain told AFP at the time.

According to the preliminary business restructuring plan, Youngman would take over 60 percent of Saab Automobile, while Pang Da would acquire 40 percent.

Story continues below…

Two new subsidiaries would then be created in China, one for manufacturing and one for distribution.

The Chinese firms also intend to supply to €610 million ($855 million) in long-term funding for Saab.

Saab would also receive €50 million in bridge financing from Pang Da and Youngman, as well as tap a €63 million credit line with the European Investment Bank (EIB).

The Chinese companies have said they prepared to invest more than €2 billion up until 2017 in an effort to return Saab to profitability.

Projections called for Saab to sell 35,000 to 55,000 cars in 2012 and increase sales to 130,000 to 150,000 cars by 2014.

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

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Your comments about this article

18:11 November 7, 2011 by 2394040
This should hardly come as a surprise. GM wants SAAB closed. It has very little to do with technology. It has everything to do with competition. Many people believe that competition in business is about like competition in sports. Nothing could be further from the truth. In sports, if a team looses a game, it is still in business. There is always another game with the opportunity to win. In business, the goal of competition is to destroy your competitor.

I really feel sympathy for SAAB employees. I've lost a job because my company went out of business. It will take a real miracle now to save SAAB; at least as a Swedish company. As the article says, the primary concern is for the stockholders. GM could care less for SAAB employees. It's all about the moneyed class.
18:16 November 7, 2011 by SimonDMontfort
GM spokesman Jim Cain hasn't totally scuppered out the deal - IF GM's concerns can be addressed. On the other hand, Eddie Chen didn't even seem to know GM might have concerns.

Given that the acquiring of technology by the Chinese has often been a 'touchy' subject to the US, perhaps the GM objection could have been foreseen?
21:26 November 7, 2011 by missjane30
GM truly has no room to puff up their feathers right now...if not for American taxpayers bailing them out through the government they would have been knocking on the door of bankruptcy.
21:56 November 7, 2011 by skogsbo
it is related to technology, but that's because so many of GM cars are the same mechanically, but under different skins and they won't want the chinese making vauxhall looky likeys etc..

Other part is the US car industry is on it a$$, it wants the least number of cars made elsewhere in the world as possible. Especially china, as they will be much cheaper than the US models.
22:25 November 7, 2011 by Just_Kidding
Will a Saab fail to roll on its four wheels if they remove all highly wonderful "patented" GM staff from it?
02:34 November 8, 2011 by bira
@2394040, SAAB has never been a threat to GM in terms of sales volume competition. SAAB has always been a niche market and, if they survive, probably always will. At best, prior to GM, they sold 123,112 units world wide in 1987 and until they can fix the volume problem they're going to continue to be in trouble. Due to the low production volume and price point, GM lost $5,000/car built between 2001-2009. History is full of car manufacturers that failed, not because they made bad or undesirable cars but they couldn't sell enough cars to sustain the business.
06:33 November 8, 2011 by Russ Cobleigh
FINALLY!! someone has the balls to say no to China!
07:59 November 8, 2011 by skogsbo
just kidding, I presume you are?

What incredible patent personnel are there? If they are I would be surpised. SAAB has produced little in years in the way of technology advance or revelations, there eco cars were ok, but an eco car certainly wouldn't be develop by someone from the US would it?

Besides, most employees regardless of where they came from are now saab employees now, any contractors will have been long gone when the company couldn't afford to pay them (if they had sense).
08:53 November 8, 2011 by Adnan M
SAAB 9-4x and Caddy SRX do not really share the looks.
09:13 November 8, 2011 by skogsbo
a 93 and vectra look different, but alot of what's underneath is the same.

Skoda do same, but the build quality of their product is a little better. Who would have though 20 years ago that Skoda would now produce a better car than Saab, how the world changes.
09:33 November 8, 2011 by RobinHood
Why didn't Youngmans and Pang Da's due dilligence process identify this problem before they agreed to buy Saab. The protection clause was reported in the press when GM sold Saab to Spyker. Did everyone forget about it? GM didn't!

GM are perfectly entitled to protect their intellectual property, it would be amazing if they didn't stand by the agreement. Saab's are stuffed full of GM hardware and software that GM wants to retain for itself. The Chinese would have priced in the high value of GM's property into the deal. Now they can't get their hands on it, they will be much less keen to acquire Saab.
11:01 November 8, 2011 by skogsbo
it's probably the chinese's main motive, aquiring the technology, they are unlikely to be saab fanatics!
16:22 November 8, 2011 by J Jack
It's a shame that China has so much poverty and wont let go of Taiwan or Tibet, yet still holds the world to ransom by owning a large portion of it's debt. Better to boycott them than sell to them anyway. Go down with honor SAAB! And how on earth did your bosses think they could sell another parties intellectual property? duh!
18:34 November 9, 2011 by SockRayBlue
Technology licensing? How about the specter of becoming property of China and not in a nice way. Why do country's give in to the pull of Chinese money? China has a wish for global domination and people thing that their lives need fulfillment via Chinese trash. No sense of order or propriety.
09:07 November 19, 2011 by Icarusty
America playing dirty again with what is a fair deal. Of course all the white sheep will go along, because hey, China is EVIL and everything that is blocking it - even legally binding contracts (because the white world respects the law, right) is fine.
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