Posted by: Bruce Einhorn on November 25, 2009
Koenigsegg Group’s decision to walk away from a deal to buy Saab is not just a blow to GM, which now probably has no choice but to shut down Saab completely, and the automaker’s workers. It’s also a setback for China’s auto industry’s global ambitions. Beijing Automotive Industry (BAIC) had been one of Koenigsegg’s partners in the Swedish sports-car maker’s proposed acquisition; under the terms of an MOU signed in September, the Chinese company was going to be become a minority shareholder in Koenigsegg, which in turn was going to take Saab from GM.
That kind of minority role would have worked well for BAIC. As my colleague Ian Rowley wrote in September, when BAIC first made its deal with Koenigsegg, Chinese automakers have typically not been all that successful in their attempts to expand beyond China. And as BusinessWeek columnists Anil Gupta and Haiyan Wang wrote in August, BAIC “has no experience in mergers and acquisitions, whether domestic or cross-border. Success at postmerger integration requires highly cultivated and deeply embedded organizational capabilities. Such capabilities have to be built through experience. They can be neither bought nor rented.”
That’s why the Saab deal could have been such a good fit for BAIC. As a shareholder of Koenigsegg, the Chinese company would have been well-positioned to have its managers observe the integration process and gain the sort of experience that could help BAIC if or when it decided to do an acqusition of its own. Now BAIC won’t have that chance.