This has just come in via news alert from Automotive News.
Thoughts on what Fiat might try to do in response are welcome in comments.
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FRANKFURT (Reuters) — General Motors and Canadian auto parts group Magna International Inc. have reached an agreement in principle that could rescue ailing German carmaker Opel, sources close to the negotiations said today.
The two sides have been trying to agree on a memorandum of understanding that would serve as the basis for bridge financing of 1.5 billion euros ($2.10 billion) as well as a trustee solution that would protect Opel from creditors in case parent GM files for Chapter 11 in U.S. bankruptcy court.
“A framework agreement has been reached. The goal is to work out as many of the details as possible before the meeting with (Chancellor Angela) Merkel in order to sign a memorandum of understanding today,” one source with knowledge of the talks told Reuters.
The rest of the backstory is here.
Related posts:
That Opel blurb...
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I’m interested in what You think Fiat might try to do, oh great one.
Reuters, citing a Swedish daily, are reporting the final three for Saab are Koenigsegg, Renco Group, and Fiat.
http://www.reuters.com/article/innovationNews/idUSTRE54R75520090528
Hallo Everybody
this confirms that GM would not agree to Fiat taking Opel given:
- their involvement with Chrysler
- the compensation they had to pay Fiat in 2005
Also the German Government possibly preferred an Austrian/Canadian partner.
I believe now Fiat will accelerate for SAAB given that they want a premium brand to add to Alfa and Lancia to share dealer networks, engines, platforms, etc.
What do you think?
C
Geez, does Swade sleep? It seems as though he has been posting around the clock the past couple of days. Good for us!
This is interesting news. I have heard that Magna does not have the capital to purchase SAAB in the past, but Opel is at least double the cost of SAAB.
I am more likely to embrace Fiat ownership of SAAB if Opel goes elsewhere, so I am taking this as good news. So Fiat – Opel would be a decent owner, K-Segg would be ideal for me, and Renco would be great from a financial perspective only.
Not the perfect scenario, but it could be a lot worse.
Well, it looks like Fiat will give it a try for Saab now for sure, so the question is – is it better to have Renco or Fiat on-board. My 2 cents go for Fiat, although I am not much of a fan of that Italian excuse of a car.
Don’t know about Fiat, but I’m afraid now Maud is going to marry Fiat and Saab (with each other, that is).
Maud quoted after the EU meeting this afternoon:
“Saab is not a part of Magna solution. We can find other buyers to the Saab. But Saab has to be a part of the total solution for GM Europe,” said Maud Olofsson.
Sounds cryptic to me. What could she have meant (if anything – she’s a politician) ?
Not really sure. That Saab is not a part in the Magna bid for Opel is clear. But a “total solution for GM Europe”? Maybe that is what she is expected to say after such a meeting where governments around Europe are worried. Or maybe what she means is that a long-term solution for Saab should involve another European auto manufacturer – hence, an Asian or US buyer is not something they will support.
My hearts list of choices…
1. Koenigsegg
2. Fiat (without Opel)
3. Renco
My brains list…
1 Fiat (without Opel)
2. Koenigsegg
3. Renco
right now im all for fiat. saab can do great things with them, just look at this old top gear episode with the 9000 and alfa sister. http://www.youtube.com/watch?v=cRXxTCIp2_c
It’s might be possible that Maud talks about coordination of loans for Saab/Opel/Vauxhall as she has talked to Merkel about EIB loans. But the reference to GM Europe is either strange or she’s missed the fact that Saab isn’t part of GM Europe. Or she is one step ahead (probably not that likely) and thinks about access for Saab to GM Europe technology if GM defaults.
Saab has deal with GM about patents and sourcing components for example for NG9-5. GM sold opel and most of the epsilonII based NG9-5 parts possibly come from Opel. OK there is also NA EPII based cars, but opel insignia is the first one. So Saab needs still to co-operate with GME and make deal about aourcing NG9-5 parts from GME which will be owned by magna and not anymore by GM.
Maybe Maud means that. Of course Saab can buy parts and what ever, but if Saab will keep plan to be profitable prices should be reasonable.
Not sure if I remember correctly, but didn’t some top-honcho at Saab said a few weeks ago that Saab already had lifelong license rights on the technologies for the 9-4X and the 9-5 with GM? But of course, they not only need the license rights, they also need to be supplied with parts and that could be the pacing item.
Nate wrote: “I have heard that Magna does not have the capital to purchase SAAB in the past, but Opel is at least double the cost of SAAB.”
Think 10 times..or more.
The Opel-Magna deal can be a good one for Opel. Saab needs someone that understand Saabs needs.. Niche and history.
Fiat might be Ok.. But Koenigsegg the best.
Cheers/Tom
This evening, media in Sweden have another go at a possible GM bankruptcy:
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As expected Saab got a new deadline for its reorganization. But the carpet can be snatched away when the owner GM on Monday is expected to end up in bankruptcy court. A GM during reorganization is believed not to want to write down any debts that Saab has.
- I do not think Saab will succeed in writing down the debts if GM goes into a reorganization. Which creditors would be interested in that? They see clearly the debts as assets they want to recover, says Marie-Tuula Karlsson, associate professor of civil law at Karlstad University, specializing in Swedish and U.S. bankruptcy law.
GM is almost bankrupt and several sources now claim that company will apply for protection under the now famous Chapter 11. The committee representing the bondholders said on Friday that such an application will come on Sunday or Monday. This whether or not the bondholders say yes or no on Saturday night at GM’s proposal to cancel the debt of 27 billion dollars against an ownership interest in a transformed GM.
Therefore, Vänersborgs district court decision on Friday that Saab may continue its reorganization for another three months cannot be seen as any real protection. None of Saab’s creditors objected to an extended reorganization, but the question is what the answer from the GM companies are really worth.
In practice, it is the U.S. government that has control over GM’s fate because of their large loans to GM, so far 19 billion dollars. U.S. government will be by far the largest shareholder in a new reconstructed GM. The company will only contain viable healthy parts. These include not Saab.
That GM has chosen a completely different strategy for Opel/Vauxhall than Saab can seem ominous. In order not to drag down Opel in a bankruptcy process in the U.S., GM has put all the assets, patents, and factories in a new company, Adam Opel. GM also has explicitly said they want to have a buyer for Opel before an application is submitted to a bankruptcy court.
Such an approach is not available for Saab. While claiming to be in the final stages of negotiations with their stakeholders, Saab will not finalize a deal over the weekend. The Saab management talks instead of a new owner may taken over Saab in the early summer.
If GM does not write down their claims to Saab, the there will be no settlement at the hearing in Vänersborgs district court June 17. Then there are large sums that a new owner must cover. Saab has debts of almost SEK 10 billion to GM. A settlement would mean that only 25 percent of the debts are to be paid.
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If true, than it is not good news !!
But on the other hand, why is the SAAB management so confident the GM backrupcy will not afect SAAB then?
This could be what Maud et al. is talking about. I’m not sure exactly which part of the GM web Saab owe money, but if that part (through GM Europe) is separated from GM NA bankruptcy (the same way as Opel seems to have been), then Saab is part of an overall GM Europe deal since Saab really needs such a deal to take place during the weekend. And instrumental to such a deal is the German Government. That could explain the other comments from the EU meeting:
Maud Olofsson was satisfied with the German information at the meeting. Germany and other EU countries renewed their commitment to keep each other informed and comply with EU state aid rules.
- “I think Germany and other countries understand the need for a European solution. And it is important that the solution is long term.”
Jöran Hägglund, undersecretary of state, said that Germany has stated that the short-term aid they were intended to give Opel and Vauxhall was not only for Germany but all parts of Europe.
- “Because of that Germany may have the pleasure to sit in the driver’s seat when we enter the next step,” said Jöran Hägglund.
Now that Fiat has lost in its bid for Opel I can see them being a frontrunner for Saab. Id still love to see to Koenigsegg get a slice of Saab maybe in conjunction with Fiat. These are very interesting times!!
Tompa,
You are right to say that Opel is 10 times bigger than SAAB. What I was referring to is that I thought that Opel was going to be purchases for just over $2 Billion US and SAAB is valued around $1 Billion US Dollars.
I should have been more clear in my comments.
I agree that I feel Fiat will push on with the purchase of Saab. I honestly think this is the best option. I feel Lancia/Alfa & Saab sharing parts can be a good thing… so long as Saab don’t inherit poor build quality !
I also wouldn’t be surprised to see Fiat move for Volvo once the dust has settled from the Opel deal…
Marchionne’s via Bloomberg:
Screw Fiat. It will be a struggle with Opel all over again. The much-touted Alfa Romeo brotherhood is just a pipe dream.
And this from the Montreal Gazette:
There’s “always Saab”? Sort of like a consolation prize? No thanks, Sergio, we know how those work out. Go Koenigsegg!
I just wonder what Fiat can manage at this point.
I mean, they just absorbed Chrysler, and it wasn’t too long ago they themselves were in TERRIBLE trouble.
I don’t have a good feeling about this whole Fiat deal. They are biting off way more than they can chew and Saab is going to wind up in the exact same position as they were with GM — holding the short end of the stick. Plus, to matlach’s point, I’m not so sure they have the financial ability to sustain such a huge operation.
As unpopular as this may sound, I think the smart move is with Renco. They have tons of cash and I believe they will let Saab be Saab. Consider this: Renco has no experience in building passenger cars for the consumer market. I think they would be the most amiable to Saab’s management team and let them run with the ball. K-segg also has no experience building mass market cars…but they do have experience building a high end ultra performance automobile, I believe their management and engineering egos would always try to beat down Saab management’s mojo. I just want Saab to be free to produce cars the Saab way, and I think from that perspective alone the best choice is Renco.
Hope I don’t get beaten up to badly for this post…
has anyone read the comments on the autoblog article for K-Segg and saab. people are excited and positive aboust saab for once. my heart is either with k-segg or fiat.
Interesting quote: “The two sides have been trying to agree on a memorandum of understanding that would serve as the basis for bridge financing of 1.5 billion euros ($2.10 billion) as well as a trustee solution that would protect Opel from creditors in case parent GM files for Chapter 11 in U.S. bankruptcy court.”
So as soon as GM exits Chapter 11 proceedings the deal with Magna goes down the drain?
@ MO — My heart is right there with you about K-segg…but is it the smart move? Time will tell. And yes, it was a really good Autoblog article, Saab needs the positive media.
LeftLaneNews also picked up on it, and comments are farily positive on Saab.
http://www.leftlanenews.com/koenigsegg-interested-in-purchasing-saab.html
It’s really difficult to see through the GM web. If the money is owed to GME-Magna it might go well for Magna could get a big deal delivering parts for the NG9-5.
And there is also that political part in all the things going on. If the European governments stand together they might get all parts of GME away from GM.
If e.g. Saab is parted from GM together with GME though both get seperately sold. As far as GME/Opel seems to get financing from the governments to bridge time until the new owner takes over it might be possible.
Once again I have faith in our reconstruction team and hope they have good reasons for their optimism.
Magna + Opel makes alot of sense. No way were the Germans going to allow an Italian company to buy it. They should be a strong business partner for Saab. Like it or not Saab make enhanced Opels for forseeable future under any scenario.
Its FIAT or Koenigsegge then. Renco I would v highly doubt. My prediction is K-segge, IF they can raise alot of equity money (not borrowed $$) up front. If they can do that they just may win it.
Every time GMNA or Opel sells a car, Magna wins too. This recreates vertical integration that was replaced in recent years with outsourcing.
The SAAB Cabrios were well build by Magna. This could be a healthy change for SAAB and its need to do business with Opel for many years to come.
Magna-Opel will indeed succeed in the east European market. Didn’t the Russians grab whole Opel factories and move them east in 1945?
A lot of Canadian connections here–Stronach and Macchione both dual citizens. And SAAB is formally owned, if I recall, not by GMNA, but by a so-far unnamed Canadian subsidiary. That might protect it from US Ch 11 laws because it would there come under Canadian laws and perhaps be sheltered as the Germans plan to do with Opel. Just speculating, but it would be interesting to learn more about these safety nets in due course.
Great work Swade!!!!!!
Bruce
It seams like Opel has a new owner. At least dpa says so.
“And SAAB is formally owned, if I recall, not by GMNA, but by a so-far unnamed Canadian subsidiary.”
SAAB Automobile AB is owned by Saab Automobile Investering AB which is owned by General Motors Of Canada.
the press has been very hard on Sergio’s Fiat ambitions, so this is no surprise. The U.S. will want Fiat to make the Chrysler deal work.
Magna winning part (how much?) of Opel/Vauxhall puts Canada into the global auto industry, and surely it helps that Stronach speaks German? The EU has been trying to find ways to bring Russia into the fold, and autos could be a good place to start.
Look for word on what happens to Saturn next…could it be that Canada has Opel-Saturn/Saab dealers in their future? Magna has to build a firewall between auto parts and auto assembly/marketing. One detail will be whether MagnaSteyr subsidiary (incorporated in Austria) becomes the legal venue for Opel/Vauxhall share.
Thanks Daniel for that detail. Karen, I think you may well be right (we exchanged remarks about just this point a couple of months ago).
On a winter trip to Mexico I noticed the Astra branded as a Chevrolet rather than Saturn.
I’m still disappointed that Peugeot (bikes or pepper grinders!) – Citroen -Michelin did not go after SAAB.
Bruce
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