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.

Monday, November 7, 2011

Victor Muller, a scheming businessman?

I went for a walk, I cooled down and I started thinking.

This is purely speculation on my part. But here is one man's view of what has happened the past couple of months.

Let's rewind to July. Swedish Automobile enters into an agreement with Pang Da and Youngman for the sale of shares that will make the Chinese owners of 53.9 percent of Swedish Automobile and thus Saab. Everybody is happy. Months pass by, General Motors makes no statement about revoking license agreements. But somewhere down the line the Chinese become unhappy with the deal. We can safely assume that both Victor Muller and the Chinese are scheming businessmen. Saab is in big financial problems. And the Pangs become greedy.

The Chinese propose that they buy all of Saab for SEK 200 million. Victor Muller is furious:

"It was totally unacceptable. Not only because of the amount, but also because of the conditions. Everything but the return of the Messiah was on the list of conditions that would have to be met in order for them to pay. So we would never have seen any money."

Muller even said that General Motors would never approve such a deal:

"If the Chinese are to take such a large stake in Saab it would violate all regulations with GM, BMW, the EIB and the National Debt Office. It simply would not be approved, it would simply mean the end of Saab," Muller told TTELA.

Victor Muller is reluctant to sell. But the court appointed administrator, Guy Lofalk, wants to end the reconstruction if Saab isn't sold, and this will mean that Saab will face its creditors and bankruptcy filing. And Saab is out of money. Without any money, Saab will go bankrupt and Victor Muller will lose everything. How can he both keep a stake in Saab and get Saab the needed funds to survive?

The Chinese and Lofalk won't listen to reason. And so Victor Muller and the Chinese negotiate a sale. The price is increased to EUR 100 million. But have the unacceptable conditions changed? And will GM accept the sale? Victor Muller doesn't think so, but he agrees to sell. Saab needs money. The Chinese are willing to offer a EUR 50 million bridge funding to save Saab through October and maybe even November and December. Saab will live another two or three months!

Now the sunk cost for the Chinese has increased with EUR 50 million (i.e. if it has been paid). Pang Da has already paid EUR 45 million for cars to be delivered in the future. The Chinese sunk cost is now EUR 95 million. That is almost the same as the purchase price!

When the deal to sell 100 percent of Saab to the Chinese is announced, Victor Muller warns that General Motors may not like the deal. And indirectly he tells GM it is okay if it doesn't accept the deal. And he is right. The General doesn't accept the deal. Just as Muller told both the Chinese and the whole world. We can't blame GM, and Muller certainly doesn't, after all he said it would end this way.

And then what? Now maybe the Chinese realize that they can't have Saab for themselves. Victor Muller and Swedish Automobile can not be brushed aside. The Chinese are about to lose EUR 95 million and not to mention their faces. But there can still be a happy outcome. There is still the agreement from July where the Chinese take a 53.9 stake and Victor Muller and the shareholders of Swedish Automobile keep the rest. And so they will agree to meet for new negotiations?

It is of course bold of me to suggest that all that have happened the last month or two has been part of Victor Muller's strategy, or more precisly that he has used the opportunity to raise short term funding for Saab, buy time and at the same keep a stake in the company. But as I already mentioned, Victor Muller is a scheming businessman...

Ps: By using the word scheming I do not mean to suggest that anyone has done anything illegal or immoral.