Swedish Carmaker Ends Plans to Buy Saab from General Motors

Swedish sports car manufacturer Koenigsegg Group AB has confirmed that its plans to buy the Saab brand from General Motors have fallen through.

After General Motors announced in June, the same month that it filed for Chapter 11 bankruptcy protection, that it would be selling Saab, which is a part of GM Europe, to Koenigsegg Group AB, whose acquisition of the brand was being backed financially by both Beijing Automotive Industry Holdings (BAIC) and the European Investment Bank, it was stated that the deal would be concluded by the end of the third quarter of the year. As the London Times notes, when it became clear that the deal would not be wrapped up by the end of September, Saab declared that it was "completely convinced that we will be able to complete the deal by the end of October". It was the support for the deal being provided by BAIC that apparently made Saab almost certain that its acquisition by a manufacturer that employs only 43 people would still take place. However the failure of the Swedish government to act as a guarantor for the deal may in hindsight have been a sign that all was not well with Koenigsegg's planned purchase of a brand which employs 3,400 people in the Scandinavian country where it first began producing cars in 1949. The London Times reports that were GM to shut down Saab, which is based in Trollhattan in Southern Sweden, completely, which the news today has made increasingly likely, in addition to the jobs lost at Saab itself, Swedish unions estimate 15,000 other jobs, in the Saab supply chain for example, would be lost. In a statement released on Tuesday Koenigsegg Group AB, which is based in Angelholm, also in the South of Sweden, explained:

After six months of intense and goal-oriented work we have come to the painful and difficult conclusion that we are not going to be able to carry out the acquisition of Saab

Christian von Koenigsegg, the firm's founder, also commented on the decision to withdraw from the deal to acquire Saab, saying:

The time factor has from the beginning been critical for our strategy to breathe new life into the company. Unfortunately, delays in completing the deal have led to risks and uncertainties that prevent us from successfully carrying out our business plan

Responding to the decision reached by Koenigsegg Group AB, General Motors issued its own statement. According to The Business Insider the statement from GM reads as follows:

General Motors confirmed today that the proposed sale of its Saab subsidiary to Koenigsegg Group AB was terminated at the discretion of the buyer.

We're obviously very disappointed with the decision to pull out of the Saab purchase," said GM President and CEO, Fritz Henderson. "Many have worked tirelessly over the past several months to create a sustainable plan for the future of Saab by selling the brand and its manufacturing interests to Koenigsegg Group AB. Given the sudden change in direction, we will take the next several days to assess the situation and will advise on the next steps next week

The situation involving Saab is not dissimilar to what occurred around the end of September when GM thought that it had a serious buyer for its Saturn brand. Fox Business News confirms that it was Penske Automotive Group, based in Michigan, that decided to withdraw from advanced negotiations to acquire Saturn. Bloomberg reported at the time that Saturn dealerships have until October 2010 to wind down their operations, with Automotive News carrying a report in early October which said that GM ceased production of Saturn cars and crossovers within a day of the sale of the brand to Penske Automotive Group falling through.