Koenigsegg buys Saab - my 2 cents......

Hard work indeed. The morning after some wild partying with a stunning Swedish girl that picked you up and said "I want you!" one realizes there's more to it. Pardon the cheap reference, but I really am into hot Swedish girls, okay? :)

The task at hand is enormous and would have been a challenge even for Renco, experienced in turn-arounds, and Merbanco, with their wealth of knowledge in industrial management (via AGCO). For Koenigsegg the challenge will be much greater, even backed by some serious financial muscle.

Swade, I think you're spot on on your prediction about GM playing dirty tricks on K-segg. I sincerely doubt Christian, Bard and their mystery investors have the experience to deal with the hardcore Anglo-Saxon corporate deal-makers and arm-twisters that GM are. It's not a game for the faint at heart and I wish Koenigsegg best of luck in he coming few months. They'll need it.

You probably know way more than I do about K-Segg, Swade, but I am really not worried about their lack of funding or inability to get some off the ground and out of the toilet. With their Norwegian investors and Swedish loan guarantees, and Saab/GM's sweet new models in the next year, my optimism says we are headed for brighter days.

My pessimism still doesn't believe K-Segg is the buyer though. All of the news organizations who have reported Koenigsegg as the buyer are quoting ONE source! SVT. What if SVT has it wrong!? News agencies get bad information from sources all the time. I am cautiously optimistic that K-Segg IS indeed the buyer, but I won't do my "snoopy dance" until I hear it from GM and Saab. And Koenigsegg.

i had the same thoughts on k-segg. i was very excited when i first initially heard, but started to wonder soon after what kind of terms GM has set on this small car maker. With the GM warranty example, is that what the terms are similar to or is that just an example. saab needs to bring the price of their cars down in the US to realistic levels, and if gm giving saab to k-segg assures that prices will rise, then really we are back to point zero. yes saab has good things going for it, but the current prices is like shooting them in the foot from the start. when you go to a online website to compare cars you see the msrp not price after incentives. i hope k-segg already has a plan to turn around perception which is a large part of saabs problem, and to boost their recognition in the market, cause as of right now, no one includes saab in the same sentence as other near/ entry level luxury brand.

Possibly Koenigsegg wants to take Saab a non-standard direction. There were rumors of Th!nk being involved some time ago, and the part of me that looks into the crystal ball sees an unexpected turn.
The strengths of Saab: efficient design, slightly unconventional, the "right amount" of manufacturing capacity, testing and certification capabilities and a worldwide presence might be worth a lot to the right company. Supposing, just supposing, their long term intent was to become a sort of mid-volume Tesla - the existing product line keeps your cash flow turning and keeps you visible until Generation 1.0 comes out. At that production volume (100k to 200k/yr) and in that niche (sport electric) GM is not selling a competitor.

Just another way to connect the dots.

It was obvious that GM would sell Saab to whichever buyer it could screw the most out of now, and also in the coming years. It appears that Koenigsegg may have fitted that mold? As you said Swade, GM is an organization with ill defined parentage!

I dont think its in GM's interest to see Saab go to the wrong buyer as Saab supplies a lot of knowhow to GM just as GM supplies platforms for Saab to build Saabs. I still reckon that there could be room for cooperation between Koenisegg, their Norwegian backers and Merbanco. Why else would GM/Saab allow the latter to join the bidding at such a late stage if they didnt think they has something constructive to offer?

Interesting times indeed ladies and gentlemen.

The idea of Merbanco and Koenigsegg tying up seems to be well-accepted here. And I think the Vikings may need some help, at some point, dealing with GM.

I'm all for it - it will give the deal public credibility while also increasing the chance of successful turn-around.

Remember that General Motors at the moment is legally bankrupt, not just morally bankrupt. It is mostly owned by the American tax payer, and its leadership is subject to sudden arbitrary replacement. Koenigsegg may be vulnerable, but it isn't desperate. General Motors is desperate. While its instinct is surely to pick K-segg's pocket, GM is on probation, big time, and its primary goal is to avoid having its four "core" badges re-engineered by a judge. If it tries to ruin a second Swedish manufacturer, Maud may yet earn her keep by telling Tim Geithner and Ed Montgomery to pull Fritz Henderson's chain. The General's long European campaign is over.

Now from Bloomberg TV:

http://www.youtube.com/watch?v=OPzContWN-E

have to agree with Rob and zippy, and, with all due respect, disagree that "GM are bastards". GM may be self-centered dinosaur bean counters, but they are not evildoers. Corporate cultures get really ingrained, and the vantage point from Detroit does NOT help except in understanding the peculiar American passion for pickup trucks and muscle cars. GM seems to have got Brazil and China right, but I figure the Cadillac culture got in the way of ever understanding what to do with Saab. Look at how GM screwed up Saturn after they created it!
Now GM has to reinvent themselves without Saturn (or Saab), AND have a fleet average of 45mpg by 2016. So, they put Springhill TN on standby shutdown AND simultaneously announce plans for a NEW assembly plant for small cars. How does that make sense?

I see this as more of a determined effort to prove the value (and, yes, superiority) of Swedish/Nordic/Scandinavian design, engineering, and quality to the whole freaking world, especially the freaking Germans.

Hey, just on and FIONA is STILL driving her Saab Aero convertible in Burn Notice!

Oh Karen... Did you mention delivering a spectacular, loud, sonic boom kick in the German's butt?

I'll take the chance and sound like Alex, but strap a de-tuned turbocharged Koenigsegg V8 to an an all-new XWD 9-3 coupe/hatch with carbon-fiber body panels, throw in the acrylic interior and a nice sexy package on the outside and throw this little Viking in the pit with a few pieces of fine German over-engineering, heck, even a 911 Turbo.

After it's done kicking their butts and eating their lunch, put it on sale at a price where it competes with the RS4 and the M3 and call it the pocket Koenigsegg with a nicer interior and sub-six figures price. I'll buy one.

I'll go back to reality now. :)

Hey Karen, does Nordic includes Canada..?
I hope it does; they've got some excellently engineered unique aircraft, like the legendary Beaver, Twin Otter, Dash-7, Dash-8 and Canadair RegionalJet.

@Eagle63 - my vision has been Saab as Arctic Nation Car, which, of course, includes Canada, and U.S., and Russia. (Magna's Stronach seems to want to make Opel into Canada's auto company).

Just don't want the Italians, Brits, and Tasmanians to feel left out...

@Kroum: I'd settle for VW's Pech to get that big sonic kick. Really do not have anything against BMW - they seem to be consistently in tune with what their customers want. That V8 better be able to run on E85 from cellulosic materials.
And there better be a Saab under 30,000USD and over 45mpg to get the volume vehicle that can turn a profit. (WITH A HATCH!)

Good night all!

The CCXR can run on E85 or E100. Gets to 1000+BHP and is apparently the worlds most powerful production car. All from a hangar in Angelholm.

There is nothing like this in Munich, Ingolstadt (R8 V10 comes close) or Stuttgart. Nor Maranello (Enzo was close) for that matter. Veyron/Zonda is the only real competition unless a new McLaren F1 comes along. Its not for everyone but its cool.

Check it out.

http://www.koenigsegg.com/index.php?menu=home

CCX/R is always the best car in videos such as Forza 2 and Project Gotham Racing 4 haha :)

Edit..video games**

Swade, I appreciate the instinctive caution. There may well be some hard corners to navigate in the coming negotiations, to be sure. But Rob is correct, GM is simply under too much pressure at the moment to be thinking about how to screw over Koenigsegg in the long-term. IMHO, Koenigsegg was the high bidder, and GM said yes. Perhaps Koenigsegg got a bit fevered once the target was in sight, and overbid a bit. But I have a hard time seeing how GM is deliberately taking advantage of K-segg at this stage of the game.

Were I negotiating or advising Koenigsegg, I would be concerned about tying down GM's commitments as much as possible in writing. Once we get a year or two out, and GM starts making some money, then I could see GM reacting poorly to having to supply even a small competitor like Saab -- particularly if the ng9-5 is as good as the rumors suggest, and GM has had to eat 12-24 months of bad press along the lines of "see what Saab can do now that GM has let them go."

This is the stage where the rubber meets the road. How long is the joint licensing of technology and platforms going to last? Are there any restrictions on where Saab can sell or how it can market said licensed technology? Do such disputes affect GM's obligation to provide parts and other support to Saab for the ng9-5 or 9-4x? I would note that the Opel sale apparently includes a clause prohibiting Opel from selling cars in the US or China. Obviously GM can't stop Saab from selling in the US, its largest market -- but GM is doing everything it can to protect itself in China, and I could see GM trying to stop Saab from selling there.

In some respects, Koenigsegg has the upper hand in the negotiations - GM is desperate to clean up its act during the bankruptcy process. I strongly doubt a bankruptcy judge is going to let GM spend money on Saab (either as a continuing operation or for wind up costs) if it chooses to walk away from a too liberal licensing deal (too liberal from GM's perspective) with the prospective buyer of Saab.

Koenigsegg needs to use this negotiating situation to include explicit language in the sale agreement covering all possible contingencies until such time as it can live without GM's cooperation. Because the most likely downside to all of this is GM's amazing tendency to change its mind -- GM thinks it can do anything it wants simply because it's GM.

Fantastic point Greg.

BUT..

Koenigsegg is the preferred bidder..

This is a wet dream come true!!

I will be in the land of trolls in a month and i am hoping that i get to see some Koenigsegg CCX's in the carpark at Saab.

I am completely over the moon with this news!!

Well I am happily surprised.

Two questions for Swade:

Could you post the CCX and Aero X next to eachother. With some different angles? This would give Koenigsegg an entry level sportscar? Also, maybe Koenigsegg might have been eyeballing Saab ever since Aero-X was revealed.

Also what will happen with the 9-4X. Do you think that one will still be built in Mexico? Koenigsegg probably never though about producing outside Scandinavia?

All in all exciting news.

I'm still holding my breath and will continue to do so at least until there is an official announcement. Then I'll take another deep breath and hold it until the deal closes. This feels far from done.

However, I an not nearly as worried about GM and what the selection, if accurate, of Koenigsegg means.

First, I think your giving too much credit to the competence of GM. The legal dealings of companies like GM are always potentially disconcerting but they are in the corner here in so many ways. A few things to chew on:

Just a couple days ago, in the middle of announcements that the sale of Saab was near, Sweden's dear Industry Minister seemed to be returning to an earlier negative outlook on the prospect of the sale of Saab with a number of what appeared to be misplaced comments that seemed to express the opinion that Saab might well be sunk. It seemed completely inappropriate at the time but perhaps this was really part of a power play to influence the selection process. Just a couple days later come reports of an intent of purchase and the Swedish government announces they are ready to start negotiating on loan assurances.

In exchange for government loan guarantees, which they have never seemed too interested in providing, you know they want reasonable prospects that Saab will be around and that jobs will stay in Sweden. Koenigsegg and a Scandinavian investor offer a better long term prospect in this regard than the other players and I think the Swedish/Scandinavian connection is potentially very important to the government's degree of willingness to assist with the loans. Large scale foreign investment groups that look at their holdings simply as assets probably don't inspire much confidence. Without the loans perhaps no one is even willing to touch Saab.

Next consider that GM might be looking for exactly the same thing! The situation might be so desperate that Koenigsegg might be the only serious bidder on the horizon that appears committed to the long term holding, manufacture, and success of the Saab brand. So far they have been the only car company serious about bidding on Saab that wouldn't be a death kiss. To say that Saab isn't going to sell at a premium is undoubtedly an understatement. GM is reportedly putting the bulk of the money into the deal to get this transition up and running. My guess is this means any deal will probably have a "future considerations" clause. This isn't uncommon when a company wants to dump a bleeding asset and can't get a decent bid from an appropriate cash buyer. So I am guessing the deal will have some sort of at least marginal prospect of "future consideration" to GM if the buyer can make a go of it and return Saab to profit. Ksegg might not even be particularly attractive to GM in this regard but it might be the only player with the apparent commitment to stick with it long enough to even offer the prospect.

Thus, a company that brings national pride, genuine appreciation of the product, an understanding of niche car building, the mindset of an automotive enthusiasts, and a long term commitment might be appealing to both GM and the Swedish government.

Although Ksegg initially might have appeared an unlikely prospect undoubtedly they have the right mind set to understand Saab, potential buyers, and position Saab for success. We know GM couldn't do it. VW? Fiat? Renault? They would bring co-development opportunities and Ksegg will probably have to reach out to someone in this regard eventually but would any of these companies be a better advocate and champion of Saab than Ksegg? I don't think so. A Chinese car company? That would be a death kiss. BMW might be able to do it but perhaps there products are already too different and too similar at the same time to offer synergy. No I don't know that there really is a bet any better than Ksegg in the current environment. Ksegg seems as viable an owner as anyone as long as the finances are there to make it through the transition. A brand new car in the pipe that is supposedly a winner is a big help in this regard. Regardless they seem to remain the only hope sitting at the table ready to play.

Looking at my 9-5 today I started thinking what a beautiful 4 door Swedish super car. I am already sensing the halo effect. Hope they can get this darn thing done.

Waiting to exhale.

As usual I agree with Swade. Exciting news, a bit puzzling, feel some here believe they are further ahead than they may in fact be.

Given size, its hard to believe Sweden will guarantee loans of $600 million but I hope they do.

And the closing is just the beginning. Saab is losing substantial money today and most certainly will until the ng9-5 comes out. A tough business in a very tough industry today awaits the lucky winner. And they still get to work with GM for years.

Hope they get it done. Hope they have the staying power and skills to se it through.

The way I see it, it's just as probable Koenigsegg has some wealthy investors behind its offer as either of the other guys. Being the proud American I am, I say more power (pun intended) to the Swedes for showing the world what they can accomplish without some environmentally caustic or wholly unknown American investors. The whole story sounds pretty Saaby to me.

This could well be a Saab comeback in a big, big way. I know I'll be looking forward to the time I can convince the wife to say "yes" to a second Saab purchase!

P.S. Thanks for the GREAT coverage of all this, Swade--you rock!

Dagens Industri today writes that founder Christian v Koenigsegg has nothing to do with this deal. It´s all Bård Eker and his investment friends, said to be both scandinavian and american. According to this article Koenigsegg is "just" a brand in this. More exciting is that this group, according to the article, is so well founded they will not need the swedish government to back any EIB loans..

link: http://di.se/Avdelningar/Artikel.aspx?ArticleID=2009\06\12\341238§ionid=BilMotor

According to Dagens Industri, there are Norwegian and US money behind Koenigsegg, and Koenigsegg and the CEO Christian von Koenigsegg are not involved. They are just a brand name to front the offer. From Googletranslation:

Koenigsegg is only the facade
Updated 2009-06-12 05:57

A group of Norwegian and American investors, led by Koenigseggs major owner Bård Eiken (left), has written a letter of intent with GM to buy Saab. This according to Dagens Industri.

Since the beginning of the year, Bård Eiken, major owner of sports car manufacturer Koenigsegg, has raised capital to buy Saab, writes Dagens Industri. Koenigsegg itself and its CEO Christian von Koenigsegg has nothing to do with the affair, but is only a brand which money is collected behind.

And money is abundant, according to DI. The buyers should have as strong finances that they do not need to take the Swedish government loan guarantees.

This would mean that both the American financier Ira Rennert and investment company Merbanco are out of the picture.

The key may be that jobs will stay in Sweden.

"We have worked very hard to split tasks between Saab and GM and move all product development for Saab to Trollhättan," said union representative Hakan Danielsson to DI.

Ok...can someone tell me what the correct pronunciation of Koenigsegg since it looks like they will be our new owner? LOL

If I can add to Karen's and Greg's comments, and that is I think GM in a perhaps subconscious way with its preferred negotiations with K-egg, is that it recognized, and admits to, all the mistakes it made handling Saab in the past 20 years.

From a logistical viewpoint, K-egg IS the best suitor in terms of automotive supply-chain management (it has a lot of ties with Scandinavian supplier, and at its beginning tapped the brain trust of some Saab and Volvo engineers behind the scenes).

And whether K-egg is the best of three bidders or not financially, in "moral" and "spiritual" ways it is the most deserving and rightful new owner of Saab. Maybe GM wants to give Saab back to the place where it "found" them back in 1989.

OK I'm rambling here .....

I have to agree with Swade that there is that instinctive caution about all this. Because it's just the first step of the final few metres.

But maybe there are some things we couldn't imagine all the time...

K-segg were the highest bidder which would mean that they are better backed by theit investors than I would have thought at first. After the things going on with Opel all were warned how difficult GM can be in negotiations. So I think that the investors also backed K-segg with some help in the negotiations to talk eye to eye with the dinosaur. And I'm sure every little thing will be written down in the contract becaue noone trusts GM.

And I think the Swedish government might have taken some steps so assure the right one gets picked. As with Opel there is quite a lot policy in the whole deal. And at least K-segg is the only manufaturer in the finals and they are more likely to have a long-term plan than any private equity firm.

As we mentioned before, Saab needs GM and GM needs Saab. During the process of reorganization GM has treated Saab some kind of good. At least they didn't put too much big stones in Saab's way (if you don't expect much, every little thing can make you happy...).
Saab with it's expected volume between 150.000 and 200.000 cars is not too much of a competitor for GM. In fact they can get more profit from buying technology from Saab (and selling parts) than they loose from Saabs sales in all markets.
And with choosing K-segg they have kept some core technology (hybrid, safety) Saab has developed more away from theit competitors than if they had chosen e.g. Fiat.
Comparing to the Opel deal a few weeks ago whre GM asked for 350 million in last minute and want to het huge license fees within the next years they have been quite friendly with Saab up to now.
And still there is the bancrupcy judge who will take care that the money spent on Saab with the deal will nor be gone with the wind.

In the end, I'm cautious but happy and still optimistic.

be glad it's Bard Eker behind this deal. take a look at his ekerdesign.com homepage, drool over the boats, motorcycles, baby strollers, projectors, and the K-egg Quant Solar Electric Propulsion concept, then follow his Lean Process (efficient product development) presentation, and then there is ekergroup.no website for the parent company.

having started out in graphic design, with a stint in product development (60 week timeline for costume jewelry at Avon), I am mightily impressed, both by the design and the collaborative parallel track product development and reverse engineering processes. First glimpse of a truly beyond 21st century company I've encountered.

Eker owns 49% of Koenigsegg, but Eker Group is far larger. No wonder he has investors wanting to partner with him on Saab.

Maybe we'll see some real Saabish design finesse before the new model launches.

really cannot wait for more details.

Wow! Just woke up to this. I have to say the potential is rather exciting.

Swade,

ROTFL @ The last line of the post.......GM are_______!

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