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.

Friday, October 28, 2011

Will the stakeholders approve the deal?

Here are the different stakeholders which can stop the sale of Saab from Swedish Automobile to Chinese companies Youngman and Pang Da.

Shareholders of Swedish Automobile
Swedish Automobile N.V. is a public limited company (Naamloze Vennootschap) with a number of shares traded freely on the Euronext stock exchange.

European Investment Bank (EIB)
The European Investment Bank, which so far has loaned Saab EUR 217 million to Saab's research and development projects for greener and safer vehicles.

Sweden's Government
Has guaranteed Saab's loan in the EIB. The task of securing the loan guarantee has been delegated to Sweden's National Debt Office.

Sweden's National Debt Office (NDO)
Has guaranteed the EIB loan by taking most of Saab's tangible assets as collateral, like the spare parts company, the property company and the tools company. The NDO's task is to ensure that Sweden does not suffer any loss by guaranteeing the EIB loan.

BMW has agreed to sell engines to the next generation Saab 9-3. From comments made by Victor Muller et al. one can assume that the engine deal has conditions bound to who has ownership of Saab.

General Motors (GM)
Saab's previous owner which still owns redeemable preference shares in Saab and also is owner of much of the technology Saab is using.

China's National Development and Reform Commission (NDRC)
China's top economic planning body. Must approve any Chinese investment abroad and foreign investments in China.

Other Chinese government agencies
There are also a handful of other Chinese government agencies which needs to approve different steps of the deal, like the transfer of money from China to abroad.

Will the stakeholders approve the deal?
The shareholders of Swedish Automobile will probably not oppose the deal as long as the alternative is bankruptcy in Saab, which would mean that the value of the SWAN shares would be zero.

The EIB, the NDO and the Sweden's Government will probably not oppose an ownership change as long as Saab stays a Swedish company and the new owners have the required financial muscles.

Now that the Chinese take full ownership of Saab, it is more likely that the NDRC will approve the deal. And there has already been news reports saying that they are positive to the deal. The other Chinese agencies are not considered obstacles once the NDRC has given its approval.

It is difficult to know if BMW will oppose the deal. But BMW has a small role, so far it has agreed only to sell one type of engine, the 1.6 liter turbo petrol engine. So BMW will probably not oppose. And if BMW does, it may not bring down the deal anyway.

The hardest nut to crack is GM. It is a fact that all three current models from Saab, the 9-3, the 9-5 and the 9-4X are based on GM technology. Earlier GM has been terrified that its technology would find its way to China. But a lot has changed the last two years. Ford has sold Volvo to China and GM has been through a Chapter 11 bankruptcy and gotten new management. GM has also spent two more years establishing Buick in China and now has a strong position with strong partners over there. So one might hope that GM's position has changed and the company will approve the sale?