Breaking: Saab to be wound down

Article by Christian Andrei, on August 27, 2010

As part of its efforts to divest of its holdings in certain brands, General Motors Company entered into talks with Spyker Cars in 2010 to sell Saab Automobile AB. However, the deal fell through during the due diligence stage. GM and Spyker Cars raised issues that both sides were unable to take care of in order for the deal to push through. With the deal cancelled, GM had no choice but to wind down Saab’s operations instead.

Koenigsegg Group AB was first in line to acquire Saab, but the company backed out from the deal in July 2010. According to Nick Reilly, winding down was the only viable alternative as Saab’s situation needed to be resolved quickly.

This is to ensure that Saab can still continue operating. However, the issues that were brought up during the due diligence period with Spyker Cars were the sort that could not be resolved as quickly as the circumstances desired.

Reilly, however, quickly clarified that it was not a bankruptcy process as Saab is still considered to be in good financial standing. What they needed to do is to wind down on the Saab’s production and distribution while still continuing to honor obligations to both customers and creditors.

In addition, Saab’s warranties continue to be serviced by the company while also making available services and spare parts to existing global customers. The intended sale was supposed to be in line with GM’s attempts to downsize, and an earlier sale was closed to Beijiing Automotive Industry Holdings Co. Ltd. The sale involved Saab 9-3, Saab 9-5 and engine technology, as well as relevant tools. GM did not expect a backlash to this sale as a result of the failed negotiations with Spyker Cars.

When it is done with its restructuring, GM’s focus will turn to the four brands that comprise its core. These brands are Buick, Cadillac, Chevrolet and GMC. There will also be a focus on certain regional brands like Opel.

The goal for this restructuring is to make it possible for the company to allocate sufficient resources for development and marketing to its core brands. Based in Detroit, General Motors Company is one of the world’s largest and oldest car companies.

First established in 1908, the company now employs 209,000 people worldwide. 108 years after its founding, GMC has customers hailing from 140 nations. GMC also forged partnerships that enable it to maintain manufacturing facilities in 34 countries that supply its main brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, Opel, Vauxhall, Wuling and Jiefang.

Press Release

Saab Sale Cannot Be Concluded - Brand to be Wound Down

General Motors announced today that the intended sale of Saab Automobile AB would not be concluded. After the withdrawal of Koenigsegg Group AB last month, GM had been in discussions with Spyker Cars about its interest in acquiring Saab. During the due diligence, certain issues arose that both parties believe could not be resolved. As a result, GM will start an orderly wind-down of Saab operations.

"Despite the best efforts of all involved, it has become very clear that the due diligence required to complete this complex transaction could not be executed in a reasonable time. In order to maintain operations, Saab needed a quick resolution," said GM Europe President Nick Reilly. "We regret that we were not able to complete this transaction with Spyker Cars. We will work closely with the Saab organization to wind down the business in an orderly and responsible manner. This is not a bankruptcy or forced liquidation process. Consequently, we expect Saab to satisfy debts including supplier payments, and to wind down production and the distribution channel in an orderly manner while looking after our customers."

Saab will continue to honor warranties, while providing service and spare parts to current Saab owners around the world.

As part of its efforts to become a leaner organization, GM began seeking a buyer for Saab's operations in January. Last week, Saab Automobile AB announced that it had closed on the sale of certain Saab 9-3, current 9-5 and powertrain technology and tooling to Beijing Automotive Industry Holdings Co. Ltd. (BAIC). GM expects today's announcement to have no impact on the earlier sale.

As the company continues to reinvent itself, GM has been faced with some very difficult but necessary business decisions. The focus will remain on the four core brands – Buick, Cadillac, Chevrolet and GMC – and several regional brands, including Opel / Vauxhall in Europe. This will enable the company to devote more engineering and marketing resources to each brand and model.

A media conference call with John Smith GM Vice President, Corporate Planning and Alliances will take place at 9:45 a.m. Eastern Time.

General Motors Company, one of the world's largest automakers, traces its roots back to 1908. With its global headquarters in Detroit, GM employs 209,000 people in every major region of the world and does business in some 140 countries. GM and its strategic partners produce cars and trucks in 34 countries, and sell and service these vehicles through the following brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, Opel, Vauxhall, Wuling and Jiefang. More information on the new General Motors Company can be found at www.gm.com.

Topics: gm, saab

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