U.S. automaker General Motors Co. is close to an agreement to sell its Saab brand to Dutch car manufacturer Spyker Cars NV.
Spyker’s offering of $500 million in the form of cash and preferred shares is seen as adequate for GM to go forward with the sale. While both companies are in the process of hashing out the final terms of the agreement including the question of production plants, there is still a chance that the deal could fall through.
The final decision on the agreement could be announced early this week at the earliest.
Spyker CEO Victor Muller said he was “still confident” to closing a deal to acquire Saab, in a text message to Reuters.
A critical factor in the deal is the loan guarantee of 400 million euros (US$566 million) by the Swedish government to Spyker. If that is not fulfilled, then the deal could fall through.
One of GM’s conditions is that Spyker’s chairman and its biggest investor, Russian banking tycoon Vladimir Antonov, should exit the company if the sale of Saab is completed.
It is believed that GM fears Russian involvement in the deal as that could pass Saab’s technology into Russian hands and be utilized for building up the Russian auto industry. GM has its own agenda in Russia and would do best to avoid strong competition from Russian carmakers using its own technology. Russia is viewed as one of the most promising emerging markets for the automobile industry.
GM’s being hit hard by the global financial crisis and was brought into bankruptcy protection. It is currently trying to restructure its business by getting rid of the brands it doesn’t need and keep its core brands.
While focusing on its four major brands—Chevrolet, Buick, GMC and Cadillac—it has either closed or sold Saab, Pontiac, Saturn, and Hummer.
A successful sale of Saab would enable GM to get extra cash and free up some of its burdensome and costly operations.
Spyker, a known brand in the luxury sports cars industry, sold 43 luxury cars last year at prices starting at 200,000 euros (US$294,000). Acquiring Saab would diversify its offering to the public and enable the company to enter new markets accessible to middle class car owners.