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| Koenigsegg to buy GM's Saab by year-end |
| Bloomberg / Stockholm Aug 19, 2009, 00:57 IST |
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Koenigsegg Automotive AB, the Swedish maker of $1.2 million sports cars, agreed to buy Saab Automobile from General Motors Co by the end of the year, potentially moving the company into the automotive mass market.
Completion of the sale to Koenigsegg and investment partners is tied to Saab getting funding from the European Investment Bank backed by Swedish state guarantees, as well as transitional assistance from Detroit-based GM, the US carmaker said today in a statement. The government said the transaction still requires further talks on terms for aid.
Taking over Saab would catapult Aengelholm, Sweden-based Koenigsegg from its hand-built supercar niche into the volume- car market, adding Saab sedans and station wagons to a lineup of models capable of reaching speeds of close to 400 kilometers (250 miles) an hour. GM said in June that Saab’s sale depends on the division receiving a $600 million loan from the EIB.
“It is good that the ownership question for Saab now gets clearer but there are still several steps left before it is completed,” Swedish Industry Ministry State Secretary Joeran Haegglund said in a separate statement. “Koenigsegg Group has to provide further private capital, negotiate about loans with the EIB as well as agreeing with the National Debt Office about the terms of potential state credit guarantees.”
Koenigsegg, the maker of the CCXR car, still must secure about $300 million in funding to complete the purchase, two people familiar with the situation said on Monday. Sweden has reaffirmed a commitment to guarantee the proposed $600 million EIB loan, while Koenigsegg and GM together would contribute about $500 million in capital, one of the people said.
Saab has been unprofitable for most of the 20 years that GM has owned it, and it sold fewer than 100,000 cars last year. GM bought the Trollhaettan, Sweden-based manufacturer in two stages from Investor AB, the Wallenberg family’s publicly traded holding company, starting in 1990.
GM has been looking for a buyer for Saab since February, when the financially struggling US company said it was breaking ties with the division and the unit was granted protection from creditors. The US manufacturer said on June 16 that closely held Koenigsegg was the preferred bidder. GM said today that Saab, which has a workforce of about 4,100 employees, will exit bankruptcy shortly.
“This contract is an important step in the journey to a potential deal,” GM said today. “We will continue to work with all parties to define the final details and ensure a fast closure of the deal, which we expect to take place in the next few months.” The US company and Saab will continue to share technology and services “during a defined time period,” it said, without giving specifics.
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