China's Minister of Industry and Information Technology disclosed that he supported "in principle" the planned buyout of Saab by Chinese companies Zhejiang Youngman Lotus Automobile Co. and Pang Da Automobile Trade Co. This is the first official sign of how Beijing might respond to the rescue plan publicized on Friday.
Pang Da and Youngman inked an initial agreement last week to pay 100 million euros or $142 million in order to gain control on the troubled Swedish automaker Saab, owned by Swedish Automobile.
The approval of the Chinese government is regarded as crucial to the pact going forward. Ministry head Miao Wei stated that the country's government is one of a group of institutions and companies that "must give their blessing" to the agreement.
Saab's former owner General Motors Co. also has a say about the takeover, as it continues to have preference shares in the carmaker and is also a major supplier of components.
Moreover, the deal is also pending the approval of the Swedish government and the European Investment Bank, all creditors to Saab. However, getting the Beijing's nod may prove especially complicated due to a strict, price-sensitive policy on overseas acquisitions.
Chinese authorities have stopped planned investments in the past, including the botched deal of Saab with Hawtai Motor Group in May as well as the Sichuan Tengzhong Heavy Industrial machinery's bid for GM's Hummer, which folded over in 2010. [source: Autonews]