10/28/11 – In a stunning turn in the SAAB WATCH 2011 saga, Saab Automotive announced early Friday that the company would be sold for $142 million to Chinese industry investors Pang Da Automotive Trade Co. and Zhejiang Youngman Lotus Automotive Co. Ironically, these are the same parties that Swedish Automotives rejected handing over the Saab reigns to late last week. As reported in The Wall Street Journal, this week, they have not only agreed to give up controlling interest in the troubled 60-year company, but to sell off the entire brand in a 60/40 split (60% to Youngman and 40% to Pang Da). It is still unclear as to how much current Saab Chairman, Victor Muller, will be involved in the future of the Swedish automotive manufacturer, but one has to think any high ranking suit in the Saab infrastructural will be replaced by a Chinese counterpart.
Saab was on the final day before they could possibly lose their creditor protection (equivalent to declaring bankruptcy) and had already pulled the plug on their restructuring process due to lack of funds. It seemed bleak that they would bounce back after refusing the original July deal with Chinese investors for a reported $245 million in loans and funds in exchange for 54% stake in the company. The Chinese held out, weighing their options, something Saab ran out of as time elapsed. When Saab realized the Chinese funding was being re-evaluated and the Chinese wanted to take complete control, the board publicly killed the deal between them. They were afraid the Saab name would be lost if sold overseas. Now it appears that Saab has been so backed up into the corner that they had no other choice but to sell. The two Chinese companies will now invest a higher price than the $245 million the original deal was for according to Mr. Muller, but the $142 million will buy out the currently issued stock held by Saab investors.
According to WSJ, Swedish Automobile (then called Spyker Cars NV) purchased Saab from GM in February 2010 for a price tag of $74 million. It claimed Saab would turn a profit by 2012, but instead, in 2012 Saab will have it’s third owner in three years. While the deal is still subject to approval by a slew of parties including GM and Chinese authorities, this is still the most comforting news for Saab in seven months filled with litigation, speculation and legal actions. It also stands out for the Chinese Automotive industry, which has been aggressively shopping for Western manufacturers to expand their international reach. Unfortunately, they have had little success. Besides Volvo, which was bought by Zhejiang Geely Holding Group Co. from Ford Motors last year, Saab will only be the second purchase of a foreign manufacturer by a Chinese based auto maker.
A memorendum of understanding has been signed between the two Chinese investors and Swedish Automobile and will be valid until November 15 of this year. This, however, will need to go through Saab’s laundry list of creditors who must approve the purposed reorganization process. They meet on Monday of next week to discuss the takeover. Until then, Saab is still in the woods, but a the clearing seems to be just ahead. Check in again with One Stop Motors as we continue our coverage of SAAB WATCH 2011 and feel free to visit us at www.OneStopMotors.com.
Tyler Baker; OSM Writer
( Source : The Wall Street Journal )
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