Company to satisfy debts, honor warranties and provide service and spare parts
By Katie Merx and Ola Kinnander
(Bloomberg) — General Motors Co. said it will shut the money-losing Saab unit after talks collapsed on a sale to Spyker Cars NV, the second failure in less than a month to keep the 72-year-old Swedish brand alive.
GM and Dutch sports-car maker Spyker decided there was "no point in carrying on" after encountering issues that couldn't be resolved, GM Vice President John Smith said on a conference call today. He declined to elaborate on the sticking points.
Closing Saab caps more than a month of reshuffling of GM's European operations. On Nov. 3, the Detroit-based automaker reversed plans to sell the Opel unit and opted to retain it, and Koenigsegg Group AB backed out of a Saab purchase agreement three weeks later, creating an opening for Spyker.
"If these folks from Spyker were serious, they would have been in the running earlier on," said Michael Robinet, a CSM Worldwide Inc. analyst in Northville, Michigan. "Brands, manufacturing and technology are not just things you can sever off very easily."
GM Chairman and Chief Executive Officer Ed Whitacre said Dec. 15 he would shutter the unit unless he had a sales accord by month's end. Trollhaettan, Sweden-based Saab was among four U.S. brands targeted for disposal as GM focuses on Chevrolet, Cadillac, Buick and GMC after its July 10 bankruptcy exit.
The transaction's "complexity" and "strict deadline" doomed the sales talks, Spyker CEO Victor Muller said in a statement. He said in a text message: "We were so incredibly close. I have no words."
Spyker was bidding in a partnership with RMC Convers Group, a company owned by Russian businessman Vladimir Antonov, who is the Dutch automaker's largest shareholder with a 29.3 percent stake. Antonov couldn't be reached for comment. Muller said yesterday that Spyker was using Koenigsegg's business plan.
Spyker fell 48 cents, or 22 percent, to 1.71 euros on the Amsterdam exchange for the biggest decline since Oct. 10, 2008.
GM's 8.375 percent notes due in July 2033 rose 0.2 cent to 26.25 cents on the dollar at 10:56 a.m. New York time, according to data from Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. A closing price at that level would be a 52-week high.
"Both parties, as of this morning, concluded there were issues on both sides that couldn't get done," Smith, GM's vice president of planning and alliances, said on the conference call. "I have been purposefully nonspecific about what those issues were. There is really no point in carrying on."
Saab is expected to satisfy debts including supplier payments, and the unit will honor warranties and provide service and spare parts, GM said. The winddown will start in January.
The process will be "orderly" and isn't a "bankruptcy or forced liquidation," according to a statement from Nick Reilly, who was named president of GM's European business on Dec. 4 after serving as chief of international operations for four months.
Some parts of Saab may survive in Trollhaettan to supply other automotive companies, CEO Jan-Aake Jonsson said at a news conference. "There are many assets within Saab, including operations that are not just focused on Saab," he said. The company employs about 3,400 workers at its plant there.
"This was a very surprising decision, and a very dismal one, especially for all the employees who get this decision at probably the worst time just before Christmas," Sweden Industry Minister Maud Olofsson said.
GM said the shutdown plan shouldn't affect an agreement announced last week for the sale of Saab powertrain technology and tooling to Beijing Automotive Industry Holdings Co.
Saab, which traces its roots to aircraft company Svenska Aeroplan AB, was founded in 1937 to secure production of Swedish warplanes. The first car left the factory a decade later. GM bought half of Saab in 1990 and took full ownership in 2000.
Candidate for Disposal
Losses and dwindling sales made Saab a candidate for sale or shutdown as GM slid toward its own restructuring in court this year. U.S. deliveries of Saab models plummeted 61 percent through this year's first 11 months, and GM identified the brand as one of four—along with Saturn, Pontiac and Hummer—it would shed to streamline operations.
GM also is winding down Saturn after a planned sale to Penske Automotive Group Inc. fell through in September. Pontiac was shut, and GM has agreed to sell Hummer to China's Sichuan Tengzhong Heavy Industrial Machinery Co.
Saab had sought protection from creditors in February, following GM's decision to cut it off by the end of the year, and exited reorganization in August.
"What the industry is saying is, we don't need this brand," said Scott Eisenberg, co-founder of auto restructuring firm Amherst Partners LLC in Birmingham, Michigan. He said folding Saab makes sense for GM because "what you really want to do is cut off all the cancer and keep the strong parts."
To contact the reporters on this story: Katie Merx in Southfield, Michigan, at firstname.lastname@example.org. Ola Kinnander in Stockholm at email@example.com.