Sign in to follow this  
Followers 0

GM in talks on partial Saab sale to Beijing Auto, sources say

1 post in this topic

GM in talks on partial Saab sale to Beijing Auto, sources say

Move could threaten more than 3,000 Saab jobs in Sweden

DECEMBER 8, 2009 06:01 CET

NEW YORK/DETROIT (Reuters) -- General Motors Co. is talking to Beijing Automotive Industry Holding Corp. (BAIC), China's fifth-largest automaker, about a partial sale of assets associated with its Saab brand, including tooling and technology, two people with direct knowledge of the discussions said.

BAIC has made it clear that it has no interest in acquiring Saab's production hub in Trollhattan, Sweden, according to the people who could not be named because the talks remain private.

Under the proposed deal, BAIC, which lacks its own car brand, would set up production in China based on an older generation of Saab vehicles, including the 9-5 and 9-3 models, the people said.

The partial sale of Saab technology to BAIC would likely clear the way for a liquidation of other assets held by the brand, including its headquarters and could threaten more than 3,000 Saab jobs in Sweden.

At the same time that GM is talking with BAIC, it is also vetting several other bidders that have expressed an interest in buying all of Saab, the sources said.

BAIC and GM both declined to comment.

BAIC has said it remains interested in Saab, part of a push by Chinese automakers to upgrade their technology and expand production.

GM, which came through a bankruptcy funded by the U.S. government in July, has said it will not discuss any negotiations on Saab because of confidentiality agreements with potential bidders.

GM's board of directors wants to see that any potential bidder has financing lined up by the end of December and will set a strict time limit for any deal, the sources said.

Although the Swedish government could still intervene to tip the balance, those tough conditions and the fast timetable make it more likely that a partial sale of Saab to BAIC will be the only viable option for GM, one of the sources said.

Value of deal unknown

It was not immediately clear if any Saab-derived models built by BAIC would be sold in a way that showed their association with the historic brand, one of the people said.

The valuation of the intellectual property BAIC would be buying also was not immediately known.

Saab has been a consistent money-loser for GM during the past 20 years. Saab lost about $340 million in 2008. GM has not released more recent financial information for the brand.

GM's board has said it will take until the end of December to consider whether it can conclude a deal to sell Saab.

BAIC had been in discussions to provide financing to Koenigsegg Group AB, a consortium of private investors that includes supercar maker Koenigsegg Automotive AB. Koenigsegg Group pulled out of a tentative deal to buy Saab last month.

Last week, BAIC obtained a $2.93 billion line of credit from the Bank of China.

Beijing-based BAIC has partnerships in China with Daimler AG and Hyundai Motor Co.

Dutch specialty car maker Spyker Cars N.V. has said it is interested in buying Saab. Privately owned Renco Group, backed by U.S. financier Ira Rennert, has also expressed an interest.

The discussions with BAIC over a sale of some Saab assets come as another Chinese automaker, Geely Automobile Holdings, is pursuing a deal to buy another Swedish brand, Volvo.

Ford Motor Co. has picked Geely as its preferred bidder for Volvo. Geely has said it also talked to GM about Saab but that those talks had ended. On Monday a Geely executive left open the door for the talks to resume.

U.S. automakers have shopped tooling for outdated models to car companies in emerging markets before.

Earlier this year, when it was still owned by private equity firm Cerberus Capital Management, Chrysler tried unsuccessfully to sell the tooling for its once-popular PT Cruiser to a range of Chinese automakers, executives said.


Share this post

Link to post
Share on other sites

Your content will need to be approved by a moderator

You are commenting as a guest. If you have an account, please sign in.
Reply to this topic...

×   You have pasted content with formatting.   Remove formatting

×   Your link has been automatically embedded.   Display as a link instead

Sign in to follow this  
Followers 0