He turned Formula One into a billion-dollar profit-maker. Can Ecclestone do the same with Saab?
He’s best known for turning the Formula One racing series into a massive money-maker, but now Britain’s Bernie Ecclestone wants to get into the car-making business. With his partner, Genii Capital, the 79-year-old British entrepreneur is making a last-minute bid to purchase Saab, the Swedish automaker that General Motors is in the process of shutting down.
Ecclestone’s entry into the bidding comes as GM announces it has chosen Michigan-based AlixPartners, “to supervise the orderly wind down of Saab,” the company said in a statement Friday morning. “GM also confirmed it has received several proposals for Saab and is continuing to evaluate these proposals.”
A bid from the Scandinavian sports car maker Konigsegg collapsed, several months ago, and GM Chairman Ed Whitacre said, earlier this week that he didn’t expect an alternative offer from the Dutch-based specialty automaker, Spyker, to be completed. As a result, Whitacre said GM was “winding down” operations at the 72-year-old Saab, though he indicated, in a meeting with reporters, that Saab could survive if someone would “Just show up with the money.”
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That’s one thing Ecclestone has plenty of. He’s transformed F1 from a money-losing series into the world’s premier racing program. And that translates into multi-billion-dollar empire. The Fortune 2009 list places the value of holdings by Ecclestone and his family at $3.7 billion.
Nonetheless, many observers are expressing surprise that the British motor sports manager would now want to get into the carmaking business.
In an interview with the Bloomberg news service, Ecclestone explained, “It’s a good brand that has probably been neglected by the current owners. As for his plans, Ecclestone cautioned, “We don’t own it yet, so let’s see what happens.”
Yet another potential bidder has entered the fray, an investment group led by former Swedish Deputy Prime Minister Jan Nygren who, according to some European sources, is being joined in his bid by former MAN SE CEO Hakan Samuelsson.
Spyker’s initial bid collapsed in mid-December, when it couldn’t raise the necessary funds from its original backers. It submitted a second offer on December 20, and reportedly revised that bid again, yesterday.
GM officials say that while the “wind down” is proceeding, they remain open to an acceptable purchase offer. In Trollhaetten, Sweden, the Saab board is meeting today to review the current situation. Among other things, they are expected to consider whether to dissolve the board if it appears no reasonable offer can be expected to save the failing maker.
They will also look at the possibility of restarting production after January 11th, when the company is still scheduled to wrap up a four-week break. Saab board member Haakan Danielsson told Business Week that with customer orders still in place, “We have the materials and we’ll just go out and build the cars unless we hear differently.”
If Ecclestone’s bid for Saab comes to fruitition, he is expected to copy the business plan laid out by Konigsegg. That would call for boosting the Swedish maker’s sales to more than 100,000 a year and predicts a return to profitability by 2012.
With the company on the chopping block, Saab sales collapsed in 2009, plunging by 59% in both the U.S. and European markets.