GM grants Saab a reprieve, CEO Henderson resignsWed, 02 Dec 2009 00:00:00 -0800
By Tim Pollard
02 December 2009 15:51
The board of General Motors has granted Saab a lifeline – by extending the deadline for bids on its stricken Swedish patient to 31 December 2009. GM has been trying to sell Saab for the past year, and the Swedish car maker has been under court bankruptcy protection since February 2009.
GM chief executive officer Fritz Henderson also announced he was to stand down. His interim successor is hard-nosed GM chairman Ed Whitacre – meaning that GM Europe and the US mothership have both lost their bosses in a matter of weeks. It's a reflection on the forces at play as General Motors struggles to find a new direction since its own bankruptcy earlier this summer.
GM warned that it would shutter its Saab division if no suitable buyer emerged in the next month. And Spyker today officially confirmed it was interested in buying Saab. In a brief statement, it said: 'Spyker Cars confirms that it, together with its shareholder Convers Group, has expressed an interest in Saab Automobile AB. If an when we are able to comment further, we will do so but are unable to provide more information at this time.'
The GM statement in full
In Detroit, a brief statement of a different kind was issued by GM: 'The GM board of directors has received expressions of interest in Saab since the conclusion of negotiations with Koenigsegg Group AB [last week]. The board will evaluate potential bids between now and the end of December. At that time, we will determine whether a suitable arrangement for Saab exists. If not, we will begin an orderly wind down of the global Saab business at that time. Due to non-disclosure agreements, we will not confirm or comment on any potential transactions or other matters unless, and until, we determine that disclosure is appropriate.'
Hopes had been high that a consortium led by Christian von Koenigsegg, and with backing from Chinese car maker BAIC, would buy Saab from GM. But the bid was derailed last week when Koenigsegg ran out of patience with GM and the deal unwound.
Today the very future of Saab hung in the balance, but the GM board's decision to give Saab another month of life support raises hopes that it can be saved.
Many commentators and analysts had warned that there were no realistic bidders for Saab and that closure was the most likely outcome. Hardly surprising, perhaps, for a company that hasn't turned a profit since 2001 – but there's now a chink of light at the end of the tunnel after today's announcement.
So who could now buy Saab?
Spyker is a new name in the bidding process. Automotive News Europe reported that the Dutch sports car firm, and its Russian owner Converse Bank, had submitted a formal offer to buy Saab. However, GM will be wary of small upstart supercar makers after the Koenigsegg deal collapsed.
Other potential suitors are looking few and far between. Bloomberg is reporting that GM is most likely to shut Saab and flog its assets to to BAIC; US finance house Renco Group has been linked to the sale; and Merbanco Merchant Banking Co says it is interested in buying Saab, according to Automotive News Europe.
The Swedish government has ruled out taking a stake in Saab; it is only too conscious that it can't be seen to favour Saab, as GM rival Ford is also in the process of selling Swedish neighbour Volvo to Chinese car maker Geely.
Swedish ministers have stressed, however, that they are prepared to provide loan guarantees in the event that a buyer is found. According to Reuters, state secretary Joran Hagglund remains hopeful that a closure of the 60-year-old brand could be avoided.
Why would GM sell to BAIC in China when it is so strong there already?
Exactly. GM has a strong foothold in China and won't want to sell to a company with big plans for Saab in China – as it would compete with its own near identically engineered products such as the Buick range, analysts point out.
Which all points to an MG Rover-style dissection. Were GM to close Saab and flog off limited assets it controlled, it could raise some of the money it so desperately needs to recoup without threatening its own competitiveness.
GM has now reaffirmed its commitment to shutting Saab by early 2010 unless it can find a buyer. Time is fast running out...
By Tim Pollard