SOUTHFIELD — General Motors (GM) did not expect to find new bidders for bankrupt unit Saab and may close it down, after Koenigsegg Group cancelled a planned acquisition, people familiar with the matter said yesterday.
Saab’s future will be decided at a December 1 GM board meeting, the people said, asking not to be identified.
While directors might opt to keep the Swedish division, as they did with the Opel unit this month, GM had a contingency plan that calls for winding down the brand, the people said.
“They should just get rid of it,” said Tom Stallkamp, industrial partner at buyout firm Ripplewood Holdings, which was part of an unsuccessful bid for Opel in Germany. Saab “really doesn’t matter in terms of technology, and there is no synergy like there was with Opel”.
Closing Saab instead of selling it would still help GM achieve the goal of trimming US brands to four from eight while working to return to profit after a US- backed bankruptcy.
A Koenigsegg sale would have protected jobs at Saab while wrapping up GM’s affiliation with the brand by the end of the year. The collapse of that accord on Tuesday marked the third brand sale to falter since GM’s July 10 exit from Chapter 11 bankruptcy.
GM backed out of the Opel sale to a group led by Magna International, and Penske Automotive Group withdrew in September from a plan to buy Saturn.
Beijing Automotive Industry Holding, which in September agreed to buy a minority stake in the investment team set up by Koenigsegg to take over Saab, said it would “cautiously” reconsider its plans to buy a stake in Saab.
The Chinese vehicle maker said yesterday that it regretted the Swedish luxury sports car maker’s decision.
“The path of internationalisation and progressive development remains an important part of Beijing Auto’s strategy,” it said.
GM’s Saab contingency plan was modelled on its blueprint for Saturn, one of the people said. Saab owners would continue to be covered by GM warranties and be assigned to a new dealership for service, the person said.
“We will take the next several days to assess the situation and will advise on the next steps next week,” CEO Fritz Henderson said. “We’re obviously very disappointed with the decision to pull out.”
Saab had expected the transaction with Koenigsegg to close by the end of this month, pumping in fresh funds to finance a ramp-up of production of older models and production of new car types.
The investment group includes Koenigsegg Automotive, maker of the 1,2m CCXR sports car; China’s Beijing Automotive; and Baard Eker, a Norwegian entrepreneur.
The team is led by Augie Fabela, the American co-founder of Russian cellphone operator VimpelCom.
“We’re extremely disappointed. It’s like a plane crash,” Eker said. “Our deadline was November 30 and at one week away we realised that we had so far to go that we weren’t going to make it, so unfortunately we had to call it a day.”
GM began getting indications of a possible snag at the weekend, and Koenigsegg’s board decided on Monday to back away.
Koenigsegg Group had sought to obtain in advance all €400m of financing approved by the European Investment Bank, while the lender planned to disburse the funds in tranches, a person familiar with the deal said.
“That’s it, goodnight, goodbye,” said Stephen Pope, chief global strategist for Cantor Fitzgerald in London. “Saab has reached the end of the road, there’s nothing left in the tank.”
Saab traces its roots to aircraft company Svenska Aeroplan, founded in 1937 to secure production of Swedish warplanes, and is based in Trollhaettan, a cradle of the country’s 19th-century industrialisation.
GM bought half of Saab in 1990 and took full ownership a decade later.
Posting losses in most of its years under GM, Saab had planned to become profitable by 2012 with annual sales of 100000 cars, according to Christian von Koenigsegg, one of the investors in the acquisition group.
Saab got Swedish court protection in February after GM said it was cutting ties. Koenigsegg won the bidding for the unit in June, and the European Investment Bank approved a €400m loan for Saab on October 21 after an initial delay. Saab had about 4100 employees as of August.
Koenigsegg’s rivals for Saab included US billionaire Ira Rennert’s Renco Group and Merbanco, a group of investors from Wyoming, a person familiar with the process said at the time.
An aide to Rennert on Tuesday said yesterday the billionaire would not comment on Koenigsegg’s exit.
Zhejiang Geely Holding Group, the Chinese car maker bidding for Ford Motor’s Volvo unit, may make an offer for Saab, Dagens Industri newspaper reported yesterday. Geely spokesman Tim Burt said the vehicle maker “remains focused” on reaching a deal on Volvo.