Koenigsegg Automotive AB makes limited-edition exotic, carbon fiber sports cars.
Bankrupt General Motors Corporation and Koenigsegg Group AB confirmed the details of a memorandum of understanding for the purchase of Saab Automobile AB this morning. The deal had been rumored for months.
The Saab sale to a consortium led by Koenigsegg Automotive AB should close by the end of the third quarter of this year, depending on how the GM bankruptcy proceeds in the U.S. The sale includes an expected $600 million funding commitment from the European Investment Bank (EIB) guaranteed by the Swedish government.
Tiny Koenigsegg Automotive a few limited-edition exotic sports cars each year. It has sales representatives in Africa, Asia, Europe, the Middle East, North America, and Oceania. The company was founded in 1994 and is based in Ängelholm, Sweden with 50 employees.
Saab filed for reorganization under Swedish Law on 20 February 2009, after GM said no more funding would be provided for the loss-making operation. As part of the plan, Saab said its design, engineering and manufacturing would be consolidated in Sweden.
“We have been consistently unprofitable with the Saab brand since our acquisition,” said Fritz Henderson, CEO of GM, in a web chat with media after the announcement. He said there were “myriad reasons for this, but the brand has outstanding appeal, incredibly loyal customers and dealers, and we ran out of money just on the eve of launching the newest generation of Saabs, which we think will be outstanding.”
Henderson said, that under the terms of the MOU, he expects GM will build the new, mid-size 9-4 crossover model for Koenigsegg in Mexico.
The Saab bankruptcy announcement came on the eve of the Geneva Auto Show last March, where Saab unveiled the 2010 9-3X model, one of three new models (9-5, 9-3X and 9-4X) due to appear during the next 18 months.
Henderson also said that under the terms of the MOU he expects GM to build the new mid-size 9-4 crossover model for Koenigsegg and continue to supply powertrains. The 9-4 is due to go into production in Ramos Arizpe, Mexico, in 2010. It is closely related to the Cadillac SRX.
The Swedish government in public statements made at the time of the bankruptcy filing did not appear to be interested in providing additional capital to Saab, but the ongoing Great Recession and massive job losses across the European auto sector has pressured national governments to do something in the face of protests from angry voters. The European Union central government has protested in vain as countries such as Germany, Belgium, Spain and the UK provided varying degrees of support to local auto operations.
This tentative agreement should allow Saab to successfully emerge from its reorganization process. It also might ease the way for the sale or reorganization of Ford Motor Company’s loss-making Volvo unit if the Swedish Government can guarantee funding.
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 the new products that are in the final stages of development. The actual values and amounts were not disclosed.
"Closing this deal represents the best chance for Saab to emerge a stronger company."
“This is yet another significant step in the reinvention of GM and its European operations,” said GM Europe President, Carl-Peter Forster. “Saab is a highly respected automotive brand with great potential. Closing this deal represents the best chance for Saab to emerge a stronger company. Koenigsegg Group’s unique combination of innovation, entrepreneurial spirit and financial strength, combined with Koenigsegg’s proven ability to create world-class Swedish performance cars in a highly efficient manner, made it the right choice for Saab as well as for General Motors.”
As part of the proposed transaction, GM will continue to provide Saab with architecture and powertrain technology for a period of time, presumably the current product cycle. Additionally, Saab plans to produce its next generation 9-5 models in the Saab production facility in Trollhättan, Sweden.
Jonsson said that there were many interested buyers, so this was not a distressed goods sale.
“The proposed agreement will enable us to maximize the brand’s potential through an exciting new product line-up with a distinctly Swedish character,” said Jan Åke Jonsson, Managing Director of Saab Automobile AB. He also said that there were many interested buyers, so this was not a distressed goods sale, and the reorganization plan, which he is leading, should be completed shortly.
The sale will be subject to closing conditions, including all the necessary and numerous regulatory, governmental and court approvals. Other crucial terms and conditions of the sale are not yet finalized.