IMPORTANT NEWS: National Electric Vehicle Sweden has agreed to buy the assets of Saab Automobile and the sale is expected to be finalized during the summer.

Sunday, October 23, 2011

Turned down a SEK 200 million bid for Saab

Corrected from $200 million to SEK 200 million

According to Svenska Dagbladet's sources, the bid from Youngman and Pang Da for Saab was just SEK 200 million. So I think we can safely agree with Victor Muller when he called it a token bid.

This bid was received on Wednesday and the amount equaled the current market value of Saab's parent company Swedish Automobile.  According to a source of Swedish Radio, accepting a bid like that would be like giving the company away. As we all know by now, Victor Muller rejected the bid.

On Friday Saab and Swedish Automobile announced that they are still in talks with Youngman and Pang Da concerning the agreement that the Chinese buy 53.9 per cent of Swedish Automobile and thus of Saab. We can also assume that the discussions might be concerning a possible Chinese acquisition of Saab in full. And according to Svenska Dagbladet's sources, a improved bid is expected shortly. But the asking price and the bidding price is according to SvD worlds apart.

During this weekend Victor Muller has reportedly been in contact with both Rachel Pang from Youngman, as well as US based North Street Capital which last week agreed to fund Saab short term. North Street also said that they have the financial muscle to go in as a major shareholder.

There is no doubt that the current owners of Saab and the financial backers will lose a considerable amount should the company go bankrupt. Swedish Radio's sources say that Victor Muller and financial backer Vladimir Antonov so far have invested around SEK 1.5 billion in Saab. The question now is at which price will they be willing to cut their losses. And how high can they press the price by reaching funding agreements like Swedish Automobile did with North Street Capital last week. Because one has to ask if that was the purpose of the North Street deal.

For me as an observer and lover of the Saab brand and cars, it now more and more looks that Saab's only option is in China, and as a fully Chinese owned company. Alternatively, US based North Street Capital needs to buy in as a major shareholder. But the latter seems very unlikely.

One question I have raised a few times already and which Svenska Dagbladet now reports that also Victor Muller has raised in the discussions with the Chinese, is if General Motors will accept a Chinese ownership of Saab and be willing to still license technology to Saab. One can hope that Ford's sale of Volvo to Geely has changed General Motors attitude towards a Chinese deal.

The only certain thing is that next week Saab once again needs to pay its employees the monthly wages. And to do so, Saab needs money. I am sure we can look forward to yet another week of drama in the Saab saga.