A report in today's Dagens Industri will give you a pretty clear indication of who the Swedish government's favourite is for a takeover of Saab.
You may remember Maud Olofsson's almost palatable disappointment when Fiat pulled out of the bidding for Opel. She'll be smiling again now as Fiat are apparently back in the game for Opel (kinda) and included in that is Sergio Marchionne's plans to include Saab.
From Dagens:
Fiat has come back as one of the candidates to take over Saab, the details of the seller to General Motors turned to the question of who should take over Opel, writes Dagens Industri.According to Dagens Industri flourishes new information that GM is looking for a better deal to sell Opel than the current candidate, the subcontractor Magna offers.
"I am not surprised. That's exactly what we have seen with GM for a long time. It signed preliminary deals, but after a time GM can open up to sweeten and enhance the bids for their own part. It is no surprise, but it does not contribute to any clarity, "says Jöran Hägglund, State Secretary at the Industry Ministry, to DI.
Secretary of State describes Fiat plans for Saab as "exciting" and suggests that Fiat probably has more resources to help Saab, who need to borrow money quickly to be able to produce cars.
"Fiat is a larger group who managed to turn a negative into a positive development and have the ability to fend off the up and downs. In light of the need for capital, it may perhaps feel better to have it in the back, unless a smaller player has enough capital with them, "he says to Dagens Industri.
Any references to Koenigsegg in the last few weeks have been quite negative in tone. The contrast here is blinding.
I'm not against Fiat owning Saab. The continued tie-in with Opel would annoy me more, personally. I'm quite sure that Saab would have more identity under Fiat than what they did under GM.
What annoys me, though, is the government's lack of consistency in their commentary. Koenigsegg may be small but Fiat have huge problems of their own in terms of debt and their work with Chrysler in the US.
I guess if they look big it's a less risky deal in the eyes of the public. And it's the public who votes at election time.
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I've got to go hunting, but I haven't read anything recently that shows Fiat are active again in their pursuit of Opel. The last I read they had left their offer on the table, saying it was the best they could make.
GM were pursuing improved offers and BAIC and RHJ are going to submit improved offers, but as I understood it, Fiat would let theirs stand saying it was the best they could do.
The Opel deal is under significant pressure, not only from GM courting different people, but also from the EU:
The guidelines for state aid to ailing companies through the German "Economy Fund" is very strictly: The state must be of high interest rates for the Opel credit. For the guarantees envisaged by 2014 further fees would be payable. Only 90 percent of a loan should be hedged.If the Federal Government and the investor do not fulfill these conditions, the control of EU state aid rescue will be effective: Opel is threatened with harsh conditions, the company would have to reduce capacity and close plants.
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Thanks to MG in comments and Alexandros via email
GM wants right to regain control of Opel, and Fiat is least favored of alternatives to Magna/Sberbank/GAZ.
I hope copying the entire NYT article here does not infringe on their copyright, but hope the Swedish Gov reads this update, which only fails to include the possibility that the Opel deal could suddenly change again if New GM emerges on July 10 or so.
read somewhere that 'analysts' give Fiat a 51% chance of success with Chrysler.
copied from:
http://www.nytimes.com/2009/07/01/business/global/01opel.html?ref=todayspaper
Sorry, but I've removed the story in it's entirety.
To all - Please copy only a small snippet of an external story and only if it's relevant to the post at hand. Big chunks like this contain a lot of irrelevant material and make reading the comments more difficult.
This has been happening more and more lately and it's making the comments less relevant and more difficult to handle.
An updated comments policy has been written and is on its way later tonight - SW
Googletrans from n-tv.de today:
The federal (German) government got problems with the Opel-rescue at the EU Commission. The Brussels competition authorities have according to information from the Financial Times Germany "doubts as to whether Germany has strict rules for allowing state aid compliance.
"We do not yet have final decision whether the Opel aid to provide temporary aid to the economic crisis are," said a spokesman for Competition Commissioner Neelie Kroes of the leaf.
For Opel hooks are now in all corners and ends. Tough course is also currently the negotiations between the U.S. parent company General Motors (GM) and the Austrian-Canadian supplier Magna on a partial sale of the Europe business, which includes Opel. In central themes was no agreement in sight, it was from the environment of the groups.
So if the European Commission says no to governments aid Opel might run out of time. There was so much hurry in the Opel deal when Magna was announced and now they don't know if anything will work...
I think Saab has chosen the better way with a quite reorganisation.
Why not Italy, sides good food and wine, also nice design, not always user friendly but indeed nice.
Piece of SWE-Italian trivia:
A good friend of mine is at Human Factors reserach at Electrolux who also own italian maker Zanussi. He showed me a stand alone fridge and asked me to open it up I immediately went for the black handle on the side. To my surprice and friends amuzement this was not the handle it was the door hinge. I almost had the whole fridge coming over me. The handle was a recessed groove in the door noticable only for the designer.
We might have an interesting future.....
Jörgen, but the fridge looked good, didn't it ? ;)
My parents live in Italy and I've seen such things often, it looks good, but is more "function follows form" than the Scandinavian "form follows function".
Maud and the government are unfortunatly rather seeing a less entreprenural future and favors a solution that promises to come in and "save" Saab.
Keywords are CHANGE, SPEED, FLEXIBILITY, EXITEMENT.
Saab needs to really strech the envelope beeing such a small but iconic brand and possibly get a new type of main customer base.
When there is so much competition coming from Asia, the Saab/Fiat setup are simply not effective enough to compete in the mainstream segment and not exiting enough to attract customers wanting that something extra.
Saab has a super strong brand image but have been hold back by GM and particulary OPEL who wants to grow in the same(they think..) segment.
Fiat is basically the same thing in being a BIG and slow company.
Saab has key competence in a lot of the future technology and GM knows this. GM does not want Fiat to get access to this technology hence a bigger pricetag for them. Selling Saab to the Chinese has for the same reason never been an option.
Lets hope for a quick Koenigsegg solution.
They don´t know the first thing about producing cars but rest assured that if they have the financial muscle behind them great things can come very quickly.
What this means for Saab is a completely new way of thinking and doing the projects, and I believe this will be a welcome change to all at Saab although many people will have to leave the company in the process.
My two swedish öre
But yet again the one who shows off the least understanding of this is the man running Saab - JAJ. In an interview published in GP June 30 he seems still not to understand. http://www.gp.se/gp/jsp/Crosslink.jsp?d=913&a=503900
Speaking at the politics/lobbyist annual get-together at Almedalen in Sweden JAJ was talking about Saab’s need for an emergency injection of cash. My translation below:
Additional funding from the new owners is not to be anticipated, says Jan-Åke Jonsson when GP raises the question of how much money he sees as reasonable for the new owners to provide:
- We have a plan based on that we can turn around Saab with the help of loans from the EIB, the State and the contributions that the old owner GM provides.
Jan-Åke Jonsson has previously said that the plan is based on an injection of money and other assistance in the form of technologies and tools from GM, a total of one billion USD, of which EIB loans is approximately 600 MILUSD.
Jan-Åke Jonsson speaks of EIB loans as a prerequisite for continuing to manufacture and introduce the new models. His plans for the use of loans threatens to become a new obstacle to get them.
EIB loans must be used for earmarked projects, not for the current operational activities.
Jöran Hagglund, Deputy Industry Minister comments:
- This is true. These loans are used to implement measures that make products and production more environmentally friendly.
But what about the new owners' financial commitment? The question goes to Jan-Åke Jonsson:
- There may be situations where you need a buffer, or we need to develop a new model which we do not know today - which may require an injection of capital from the (new) owners, says Jan-Åke Jonsson.
But Jöran Hägglund does not exclude that the situation can be resolved.
- The latest information we have is that this will be solved by the parties themselves. The most recent information we have from both GM and Koenigsegg is that "we will solve this, without government intervention."
Jöran Hägglund replies with a smile in response to the question of how he views the new owners' public prescence (or abscence). Then he says:
- We have met all of them, and it is clear that some seem more shady than others, or whatever the appropriate phrase might be. But we have made it clear to them that if they become the ultimate owners, we will conduct a thorough economic analysis of each one them. That process we have just begun. To do so Hägglund’s team will be getting help from the outside.
- We will get help from different sources, so I am sure we will get the information we need.
I ask myself: How on earth can an experienced and (most likely) very capable man like JAJ still give the impression that the EIB loan will save his bacon and be used to pay current production expenses? How is this possible? The man is no fool – he must have a plan which is not known by others and that includes maintaining the view that EIB money can be used in a way that it should not be used.
Moreover JAJ seems to see any new owner’s addition of capital to be so far ahead in time that it would only be needed if and when “we need to develop a new model which we are not aware of today”. How many years ahead is that? 5? 10?
I find all of this very, very strange. The boss of a major corporation who doesn’t understand the rules of the game??....No way
Another thing is becoming more and more evident is that the Goverment is not impressed by the K-segg group. Describing people as shady is quite a statement – even if it “shady” in English is stronger than “ljusskygg” in Swedish.
I don’t know if the following theory makes any sense but what if the K-segg entry to this story only had one purpose and that was to show up an owner at the time the debt-reduction was to be tried in court in mid-June. Without a “new” owner perhaps the court would have ruled against. Bringing in obscure and exotic people like Bishop and Fabela whose finances were not known and would take time to evaluate would provide time and take the focus away from what is really going on. In the meantime debt reduction would be achieved and negotiations with the ultimate buyer could continue behind closed doors.
What’s in it for K-segg? A hell of a lot of free PR – and both CvK and Bård Eker could be enjoying their 15 WEEKS of fame.
........But Jöran Hägglund does not exclude that the situation can be resolved.
- The latest information we have is that this will be solved by the parties themselves. The most recent information we have from both GM and Koenigsegg is that "we will solve this, without government intervention."........
concerns the injection of cash that JAJ says Saab needs immediately.
If the funds can be used for greening production as well as product, then maybe that's where he's looking to apply it. Convertible and 9-5 production are coming on board soon.
Just a thought.
Hagglund's last comment is only slightly encouraging.
I'm getting to the point where I hope K-Segg are successful just to spite the government. Not a good place.
Now, Hägglund says: "We have met all of them, and it is clear that some seem more shady than others, or whatever the appropriate phrase might be. But we have made it clear to them that if they become the ultimate owners, we will conduct a thorough economic analysis of each one them. That process we have just begun."
GM and the K-segg Group have a LoI, which means that K-segg Group could be "the ultimate owner". They will receive loans form EIB/Swedish Government if the due dilligance by the government is positive. If not, then there will be no loans...
In that case, there are two scenarios:
1. Saab has somehow enough money to stay alive or
2. Saab will be looking for a new owner. Government seems to prefere Fiat. I hope they behave fair to Saab...
I don't want to mention the possible third scenario....
And while viewing, thinking and writing about the business side of Saab, in my private life I've got my eyes on a very nice, sleek, black, shiny Saab 9-3 aero sportsedan going for a price which is "an offer you can't refuse". This would be my first-ever Saab, I can add.
* They don't give a toss if Saab lives or dies, if the jobs are lost or not. This is an ideological stand. They feel that it should only be the "free market" that regulates such things. If the company dies, then it wasn't fit to live. Obviously, they can't say this openly, because it would cost them votes, but it's how they feel.
* All their focus when looking at the potential buyers is in minimizing the amount of money they have to lend them, and maximizing the chances of getting it back. In this perspective, the bigger the buyer, the better. As well as suiting their ideology, this standpoint is also a practical one, because they believe - probably with some justification - that protecting the tax payers' money will be popular with the voters.
* On top of these two basic foundations of government policy, there's also the EU perspective. At present, they are so up in the blue about chairing the EU for the next six months that they look at everything from a European perspective. They believe that Europe needs a few huge car companies that can compete with the Asian and American giants. If Fiat is about to create a new such giant, then they are all for it. What the consequences would be for Swedish jobs and Swedish technological know-how is irrelevant. That's just a petty local view of things, the government rises above such trivial matters. (And maybe this stand will earn them praise from their European colleagues, yay!)
That we voted these clowns into office is beyond belief. But the opposition side isn't one bit better, so I guess we're screwed either way. Is there any sane country somewhere to emigrate to?
At the moment there are speculations and roumors in the press (really DI.SE readers comments) that the deal with K-Group is off since there are not enough financial strength.
Anyway, I am sure that Jan-Åke Jonsson and Saab knows much more about the conditions that come with the EIB loan than any of us and also much more than the media. I choose to have faith in JÅJ. So far he has been steady as a rock :)
Yes the fridge looked awsome. Nice lines, bold appearance, great color, relatively small interior space and a very nice hinge... That´s italian
Still, I recall that EIB loans were part of the K-Group deal or I might have missed something.
While I have been hard on Bishop, I like the energy with the other K-Seggers. I sure hope they weren't sandbagged by GM or the government. That would be very uncool.
I bet the government would support a buyer who has both the resources and experience to turnaround Saab.
At this point, if it's Fiat, so be it. Lord hope it's not Renco - the bad press would kill Saab.
If they do not like K-segg what about a K=segg/Merbanco group, you would have plenty of money, world wide distribution, know how, and still have a cool parent co. Me personlly I would think its a win-win
Göteborgs-Posten also reports on Swedish car sales, but in their take, it's still "very tough going for Saab", sales are down 59.3 percent compared to the same month last year.
It's interesting to see how very differently the same facts can be presented. It's sort of a parallel to how very differently potential Saab buyers can be viewed by the government... :)
Well done. I could not have said it better Your points are extremely important to have in mind when discussing Saabs future.
We have a neo-liberal government who got elected, not for their political agenda rather because of the quality of the Socialdemocrats. Their ambition is a 51st State of the Union, yet even more radical when it comes to economic issues. President Obama feels like a communist compared to the swedish ministers.
The politicians her do not give a dam... what happens to SAAB. Chairing the EU for half a year is what is on their aganda now. European solutions are important to them so I am not the least surprised if FIAT shows up again and eventually becomes owner of SAAB.
Why not. I would gladly buy more italian food and wine. A gourmet culture that surpasses Swedens boild potatoes and meatballs any time and day.
If you drive i northern Italy make space in the car for the very best wine and - Picolit dessert wine from my favorite Vinery Castello di Spessa near Udine on the road SS 56 towards Gorizia. http://www.icastelli.net/hotel.php?id=126&lingua=eng&idportale=1&t=1
One would assume that JAJ knows more about EIB loan requirements than any of us. However facts remain that he has been quoted many times having made statements that are quite contradictory to the EIB-requirements described by Mr Joran Hagglund of the Industry dept as well as people at the National Debt Office.
The fact that he knows the rules does not mean that he can’t try to influence media and the general public that the state should lend Saab money. If he officially accepts the rules he can not use the political forces as leverage. Right now there are many who feel that tax payers money should be invested in Saab. However, very few are willing to invest their own money in Saab. In fact, NOBODY seems willing to invest private capital, so why on earth should Maud and Co invest?
The only way for JAJ to get state funding is for him to keep on raising the issue of state (or EIB) funding as a means of financing Saab’s day to day business, and hope that enough people/media and politicians jump on the bandwagon. The opposition leader Mona Sahlin knows absolutely nothing about business but would happily purchase votes via spending taxpayers money. She is JAJ’s only remaining hope if there is no money coming from K-segg (or FIAT).
And the fact that Saab now has seen an increase in sales sounds great but Saab need to sell some 10.000 cars per month to reach profitability. Selling 750 in a month and making a noise about it is just silly. Each car produced during recent years has meant a loss of some 3000 USD. Sadly Saab have a very very long way to go.
I hope JAJ has a plan that is much more cunning than the one he seems to be pushing, because he seems to be disregarding "facts" and that is not looked upon very kindly.
Could someone outline for us braindeads a simple timeline of the next few months with any important milestones and/or drop dead dates and events?
Without Government support, can K-Segg buy Saab?
The EIB raises substantial volumes of funds on the capital markets which it lends on favourable terms to projects furthering EU policy objectives."
"We are at the service of the Union.
We were created by the Treaty of Rome; our shareholders are the Member States; and our Board of Governors is composed of the Finance Ministers of these States.
To receive our support, projects and programmes must be viable in four fundamental areas : economic, technical, environmental and financial."
BTW, EIB loans are being used for airport expansion in Germany and road building in Poland. Please insert any and all political agendas into the EIB loan process. Job creation is a factor. One could argue that financing the assembly of Bio-power Saabs is environmentally friendly use of EIB loans.
Producing any vehicle with lifespan and use cycle > 5 years is considered a longterm investment.
2) EIB requests six weeks to review applications, and July 2 meeting 'deadline' was missed, no meeting in August, so earliest any EIB funds could be released to Saab is Sept 22.
3) other dates to note: July 10 is when GM hopes to exit Ch11 in U.S.; July 15 was deadline for next Opel/Magna/Sberbank hurdle. I still think GM is trying to undo Opel deal with anyone, or at best insure GM can 'buy' control of Opel back in 3-5 years. How that affects K-Saab deal is unclear.
4) In mid-May, Saab had 90MILUSD left of February GM 'gift' of 150MIL. Monthly Cash burn rate at currrent production levels is maybe 25MIL. Saab will need more money in late August, earlier to increase production.
5) K-egg Group AB has to be less OPAQUE (my definition of shady).
6) Swedish government has to decide whether they want to be remembered for saving the cluster of innovative engineering (Cargine, Electric, etc) and exports that a viable Saab represents, especially if Volvo is bought by a Chinese auto company.
so, hughW, take it easy until July 10 earliest. Everything until then will be rumor and speculation showed by political posturing.
@none: anything else out there? depends on what happens to Opel deal with Magna/Russians, and GM bankruptcy.
Maybe Norway's Sovereign Wealth Fund or Hyundai or Magna/GAZ without Sberbank will re-enter the K-Saab story after July 10.
maybe we should all go hunting like Swade.
Are weasels and skunks in season?
Fiat taking over Saab now that the former owns that train-wreck aka Chrysler would be a disaster for Saab and something that would never, ever happen. Why? GM has stated it wants to be 'friendly' with Saab to take advantage of Saab's technology and there is no way on Earth Fiat would allow that in a million years!! With unions holding more than 50pc of the new Chrysler/Fiat I reckon Fiat is in for a very rough ride and I dont think Saab needs to play 'third fiddle' to that mess.
Does the Swedish government not realise that Fiat, having now partnered with Chrysler, is a toxic concoction that would finish Saab off?
The government has previously declared that Saab aren't eligible for any emergency loan, and a "bridge loan" like the German one given to their auto manufacturers is not in the government tool box during this crisis.
"No, it isn't," says Jöran Hägglund, and he was taken completely unawares by Saab's description of the cash situation in the company.
"This was totally new information for me today. In the talks we've had with Koenigsegg and GM, we've made clear about the EIB process and that they have to handle the meantime. No such demands have been raised previously. On the contrary, they've said they would handle it."
And in a commentary, DI reporter Håkan Matson expands on Fiat's position:
But waiting coolly in the wings is Fiat head Sergio Marchionne. With poorly concealed delight, he has noted that negotiations between GM and Magna "don't appear to be going very well" and explained that Fiat's interest remains - but that he won't raise the bid (which didn't entail any money, only cooperation).
Fiat is the only quick, obvious and industrially stable alternative, as everyone involved is well aware.
Never has undersecretary Jöran Hägglund made this point more clearly than yesterday in Almedalen.
All that competitor GM and the German government have to do is to rise above prestige and swallow this bitter Italian pill.
What ever happens - RHJ, Beijing, Fiat - Saab Automobile will be affected.
Fiat will hardly take over Opel without making sure that they get Saab with the deal - precisely to get control of the technology. Beijing aren't likely either to let a free opportunity slip by for acquiring a potential prestige brand. What RHJ wants is less obvious.
And while this is going on, nothing is heard from Saab's potential owner, Koenigsegg Group. No statements on what they want, no declarations of financial muscle, no attempts to break the mystique surrounding the members of the group - still not, after two weeks.
General Motors apparently have no qualms about writing a "memorandum of understanding" with several parties. And the longer Koenigsegg Group delay in laying their cards on the table, at least to the Swedish government that they are actually seeking support from, the more uncertain this solution becomes.
This must be one of the more complex mergers in business history.