GM Announce Tentative Agreement to Sell Saab to Koenigsegg

After the February announcement that General Motors was planning on dumping Saab, the American parent appears to have come to terms with a suitor.  supercar manufacturer Koenigsegg has agreed to take on the Swedish brand.

Both parties have signed a memorandum of understanding, with anticipation of the deal closing by the end of September.  Terms of the deal include $600 million in financing provided by the European Investment Bank, and secured by the Swedish government.

Saab operations will continue in full, thanks to funding from both Koenigsegg and GM.  Because of this, Saab intends to continue with the launch of "several new products that are in the final stages of development."  In addition to GM continuing to provide platforms for the time being, Saab plans on building the next generation Saab 9-5 in Trollhättan, Sweden.  The new 9-5 is due for a Frankfurt introduction later this year.  The larger 9-5 should be about six inches longer, with a wide variety of powerful engines, all-wheel drive, and LED taillights.

What is uncertain is if these future plans include bringing the Koenigsegg Quant electric concept closer towards production.  Koenigsegg is believed to be excited about the 500 kilometer-range vehicle's potential, especially considering its reported recharge time of 20 minutes.

The supercar manufacturer also plans to ramp up Saab production to 150,000 units per year by 2011, up from 20,000.  That reason alone could have been enough to win the backing of the Swedish government, as jobs that could have been at risk now have a better chance of being safeguarded, provided the outcome of Saab's in-court reorganization.

With this sale moving forward, Koenigsegg will be keen to avoid mistakes made by other manufacturers in the past.  The merger between Daimler and Chrysler saw the combination of a performance vehicle automaker with a volume seller.  Significant problems arose when the German car company showed strong reluctance at sharing technology with their high-volume American counterpart.

Of the deal, Saab Managing Director Jan Åke Jonsson said, "Today's announcement is great news for Saab's current and future customers, dealers, suppliers and employees around the globe."

Press Release

• Deal will secure Saab's future
• EIB expected to provide $600 million financing with state guarantee by the Swedish government
• GM reinvention achieves another milestone

Zurich. General Motors Corp. and Koenigsegg Group AB, a consortium led by Koenigsegg Automotive AB, today confirmed the details of a memorandum of understanding for the purchase of Saab Automobile AB that secures Saab's future.

The sale, expected to close by the end of the third quarter of this year, includes an expected $600 million funding commitment from the European Investment Bank (EIB) guaranteed by the Swedish government. Additional support is to be provided by GM and Koenigsegg Group AB to fund Saab's operations and product program investments. This includes plans to launch several new products that are in the final stages of development. Saab had filed for reorganization under Swedish Law on Feb. 20, 2009. This tentative agreement is a key milestone for Saab to successfully emerge from its reorganization process.

"This is yet another significant step in the reinvention of GM and its European operations," said GM Europe President, Carl-Peter Forster. "Saab is a highly respected automotive brand with great potential. Closing this deal represents the best chance for Saab to emerge a stronger company. 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."

As part of the proposed transaction, GM will continue to provide Saab with architecture and powertrain technology during a defined time period. Additionally, Saab plans to produce its next generation 9-5 models in the Saab production facility in Trollhättan, Sweden.

"The proposed agreement will enable us to maximize the brand's potential through an exciting new product line-up with a distinctly Swedish character. Today's announcement is great news for Saab's current and future customers, dealers, suppliers and employees around the globe, said Jan Åke Jonsson, Managing Director of Saab Automobile AB.

The sale will be subject to customary closing conditions, including receipt of applicable regulatory, governmental and court approvals. Other terms and conditions specific to the sale are not being disclosed at this time. Deutsche Bank acted as financial advisor to General Motors Corporation.