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GM to sell Swedish unit Saab to Koenigsegg
STOCKHOLM -- Saab Automobile, General Motors Corp.'s struggling Swedish unit known for its family cars, was rescued Tuesday by a consortium led by Koenigsegg Automotive AB, a tiny company which produces only a dozen custom-made super cars a year.
GM said in a memorandum of understanding that the sale would include an expected $600 million funding commitment from the European Investment Bank, guaranteed by the Swedish government. Additional funding for Saab's operations and investments would be provided by GM and Koenigsegg Group AB, it said.
The sale is expected to be completed by the end of the third quarter and is subject to regulatory approvals by authorities.
"This is yet another significant step in the reinvention of GM and its European operations," GM Europe President, Carl-Peter Forster, said in a statement. "Closing this deal represents the best chance for Saab to emerge a stronger company," he said, adding "Koenigsegg Group's unique combination of innovation, entrepreneurial spirit and financial strength, combined with Koenigsegg's proven ability to create world-class Swedish performance cars in a highly efficient manner, made it the right choice for Saab as well as for General Motors."
The company behind the consortium, Koenigsegg Automotive, was founded in 1994 by Christian von Koenigsegg, a Swedish sports car fanatic and entrepreneur, who remains the chief executive. It makes luxury sports cars at its headquarters, a former air force base near Angelholm, in southern Sweden.
With a full-time staff of 45, Koenigsegg makes around a dozen cars a year, customized for every buyer. The company doesn't advertise prices for its models, but they are believed to range between 8 million and 18 million kronor ($1 million-$2.3 million) each.
Saab, on the other hand, has more than 4,000 staff worldwide, is represented in some 50 countries, and typically produces more than 100,000 cars a year.
Saab Chief Executive Jan Ake Jonsson called the deal "great news" and said it would help the brand to maximize it's potential "through an exciting new product lineup with a distinctly Swedish character."
Nelson Silveira, a GM spokesman in Zurich, told the Associated Press that no pricetag had yet been made official since the announcement was still only a memorandum of understanding.
Silveira could not provide details of the consortium backing up Koenigsegg.
On Monday, public documents showed that Koenigsegg Automotive AB had applied to start a new company named Koenigsegg Group -- fueling speculation that a takeover of Saab was in the pipeline.
Shareholders in the new company were listed as Koenigsegg Automotive AB with a 23.4 percent stake, its owner and Chief Executive Christian von Koeningsegg's firm Alpraaz AB with 42.6 percent, Norwegian holding company Eker Group with 11.8 percent and San Diego-based Mark Bishop with 22.2 percent.
Board members would include Naples-and Florida-based Augie K. Fabela II -- the co-founder and former chairman of Russian telecoms operator VimpelCom -- Christian von Koeningsegg and Eker Group owner Baard Eker. Washington, D.C.-based Melissa Schwartz was named deputy board member.
Koenigsegg representatives did not immediately return phonecalls seeking comment.
Saab went into creditor protection Feb. 20 in an effort by GM to sell the unit. Interested bidders reportedly also included private equity firm The Renco Group Inc. and investors Merbanco Inc.
Saab spokeswoman Gunilla Gustavs would not confirm how long her company had been in talks exclusively with Koenigsegg, and declined to reveal the identity of the last few bidders.
Sweden's Enterprise Minister Maud Olofsson said she was pleased that "the ownership question is becoming clearer for Saab."
Matts Carlsson, an analyst of Goteborg Management Institute, called the deal "exciting, interesting and challenging," adding that although no price sum has been made official, the Trollhattan, Sweden-based unit is likely to have been more or less a giveaway.
"(Money) is not really what it's about right now, it's about the possibility to back up this deal," he said.
Carlsson, who along with some other market watchers has voiced criticism of the idea of a small sports carmaker taking over the reins of a large company such as Saab.
"Saab needs to be left alone to proceed with its strategy," he said, noting that any tampering with its five-year plan to produce premium cars that are not aimed at competing with luxury brands such as BMW or Lexus "could destroy it."