IHS Global Insight Perspective | |
Significance | Spyker has removed the deadline for its renewed bid for Saab and is continuing negotiations with GM. However, the Swedish government has started to make preparations for the automakers closure. |
Implications | The more details that emerge, the greater number of questions that can be asked about Spyker's bid for Saab. |
Outlook | With GM's own self-imposed funding deadline looming on the horizon, it is likely to make a call on whether to sell or close Saab in the next week or so. |
Spyker Cars has removed the deadline that it had put to General Motors (GM) regarding its renewed bid to capture Saab. The Dutch sports car manufacturer had initially set a deadline of 17:00 Eastern Standard Time yesterday, but this was removed. Victor Muller, the chief executive officer (CEO) of Spyker told Reuters that the latest deadline "is open-ended. It has been extended until further notice." He added that "We've had various discussions with them [GM] today [Monday]," and that talks were "definitely" ongoing, but up to now there was nothing new to report. However, he gave hints of the structural make-up of the companies if the bid succeeded, saying that Spyker and Saab would operate as sibling companies. Spyker would also benefit from Saab's technical resources and distribution network, while Spyker would bring entrepreneurial skill to the Swedish automaker. Muller added that "The synergies are very, very clear."
A new bid was sent to GM on Sunday (20 December) by Spyker which sought to address the 11 issues that arose during the due diligence process and which caused Saab's current owner to announce that it would begin winding down procedures last Friday (18 December; see Sweden: 21 December 2009: GM Announces Winding Down of Saab; Spyker Makes Renewed Offer). No details were offered at the time, other than it would not require loan guarantees from the European Investment Bank (EIB) initially, which Muller has subsequently said could be applied for during 2010. However, Swedish newspaper Svenska Dagbladet has reported that the deal would now see an ownership structure that is backing the bid would remove the use of Russian parties to placate worries that GM had of their involvement. Sources told the newspaper "That which was considered a problem has now been solved."
Following the announcement of Spyker's latest bid for Saab, Swedish Enterprise Minister Maud Olofsson told a press conference that the approach had offered a "very, very slim thread of hope, there is a chance of finding some kind of solution to the question of Saab." However, she added that "It is very late, there is a very tight timetable, and that means the situation is very difficult." The Swedish Prime Minister Fredrik Reinfeldt also told journalists "We should be careful about fuelling new hopes in a situation where the people in Trollhättan, and at Saab and their subcontractors are thrown between hope and despair." In preparation for this latest round of negotiations falling through, the Swedish government has announced that it would allot 542 million Swedish krona (US$74.5 million) to support education and job plans for those made redundant as a result.
Outlook and Implications
Although this renewed bid gives a small ray of hope for Saab, the lack of details with regards the latest bid adds many more questions. The main one seems to be how the bid will be funded. Spyker is currently a loss-making concern, and remains reliant on Russia's Convers banking group, which owns 29% of it, and its owner Alexander Antonov. However, if the new bid discounts Russian backing, it is difficult to understand where such a small company would be able to get such funding. Certainly traditional routes, such as large financial institutions are unlikely to want to take part, while a statement made by Muller to Bloomberg has said that another shareholder, the Abu Dhabi-government backed Mubadala Development Company sovereign wealth fund, is not involved. On top of this is the decision to withdraw a bid for EIB loans until after the completion of the deal, as there is no guarantee that Spyker and Saab will be able to return to the table after this. There is also the matter of continued vehicle development. Although there are two important Saab models in the pipeline—the 9-5 sedan and estate and 9-4 X sport utility vehicle (SUV)—which will be important cash generators for the business, and others on the way, these are all based on GM architecture. Saab will have to go through the expensive process of research and development (R&D) on new models itself going forward, an area in which even the largest automakers are seeking to join forces. There is also a question as to whether new management can reinvigorate the innovative technology and design that the automaker was known for in the past and which gave it such a loyal customer base and strong sales during the first 40 years of the marques life. GM will have to take many of these areas in to consideration as it looks at the new bid and continues negotiations with the automaker, and ask whether Saab can remain as a credible automaker under Spyker. With GM's own self-imposed funding deadline of 31 December appearing on the horizon, an announcement either way is likely to be taken over the next few days, and could ultimately prove the end of the brand "Born from Jets".