The assembly lines in Trollhättan are still down and will be down for a while. With Spyker & Saab gasping for money, another Chinese party threw them a life line today. The price: Saab will be in Chinese control if and when all is approved.
Today, Saab, Chinese distributor Pangda Automobile and car manufacturer Zhejiang Youngman Lotus “signed a non-binding memorandum of understanding (MOU). The MOU includes an equity participation in the total aggregate amount of about EUR 245 million as well as a strategic alliance consisting of a three partite distribution joint venture and a tripartite manufacturing joint venture for Saab-branded and child brand vehicles in China,” Spyker says in a statement. The statement continues:
“The equity stake of Pang Da in Spyker will remain at 24 % raising its investment to EUR 109 million. The share price remains at EUR 4.19 per share and Pang Da will have the right to nominate up to two members of the Supervisory Board of Spyker.
Youngman will take a 29.9 % interest in Spyker on a fully diluted basis investing EUR 136 million at EUR 4.19 per share. Youngman will have the right to nominate up to two members of the Supervisory Board of Spyker.”
29.9 plus 24 percent equals 53.9 percent, says my calculator. Bingo. Saab is Chinese.
Then, there will be several Chinese joint ventures.
- There will be a manufacturing JV that makes “Saab branded and child branded vehicles for the China market.” Saab Automobile and Youngman will each have a 45 percent interest in the manufacturing JV and Pang Da will hold the remaining 10 percent.
- Then, there will be a distribution JV. Saab Automobile and Youngman will each have a 33 percent interest, Pangda will hold 34 percent.
Now keep in mind that Saab is owned by Spyker. If the deal goes through, Youngman and Pangda will own the joint ventures via their ownership of Spyker and hence Saab, and then again directly. Victor Muller better polish his resume.
Says AFP: “The deal, which still requires regulatory approval from a number of authorities, would place basically all of Sweden’s auto industry in Chinese hands, after Swedish brand Volvo was bought by Chinese Geely from Ford last year. Saab and Spyker chief executive Victor Muller said he was thrilled by the deal.”
Production will stay shut down at least until the end of this week, company spokeswoman Gunilla Gustavs told AFP, adding it was too soon to say when the assembly line would begin moving again.
Youngman is a relative nobody in the highly fractionalized Chinese auto market. They are more known for their buses. Youngman Lotus makes uninspired cars with the Lotus badge for added cognitive dissonance.
Whether Saab will continue to live another day or die, that is in the hands of Chinese regulators, GM, and European governments. AFP has its doubts: “It remained unclear however if the deal would be approved quickly enough to rescue Saab.”
The Financial Times called around and received nothing but unenthused comments.
Bill Russo, head of Synergistics, a Beijing auto consultancy, and former head of Chrysler in China, said: “Going public before doing the political engineering is generally not a pathway to success in China”.
“I don’t think Youngman has enough credibility to be the third partner in the Pang Da-Saab deal”, Namrita Chow, analyst with IHS Automotive, told the FT. “Beijing is unlikely to give approval for a venture that will bring direct competition to BAIC”.
Maybe, maybe not. There are rumors in Beijing that the smaller companies could be stalking horses for a bigger Chinese company. Saving Saab in Europe and setting up a new factory in China needs someone with bigger pockets.
What are the insiders in Sweden saying? Not much. The Saabsunited fanzine runs the press release uncommented between the story of a Saab with three big dogs, and an update about the still unsolved leaseback. And what does inside-saab.com have? A story about a drive through the Swedish midsummer night.
Prior dealings received much more fanfare.