Saab ownership update – The Geely-Maktoum-Gyllenhammar-Volvo conundrum

Whilst I can do my best to report on the Saab ownership situation as it pops up in the Swedish press, it’s always good to have people on the ground there in Sweden who hear other things that may not make the big headlines. They also understand the various backstories of the Swedish players involved. These are perspectives I just can’t get until I hear from them and it’s this perspective that I’d like to share here now.
First of all, it pays to remember that the US Automotive Task Force will report on GM’s progress and perceived viability on March 31. GM did its best to create a good impression by saying it didn’t need a $2billion instalment that it was offered for this month. They ain’t fooling anyone, though, and if that March 31 report goes negative then it could be curtains for GM.
The US administration will most likely call in the loans it’s already advanced, forcing GM into bankruptcy procedures. What happens to Saab at that point is a little unclear to we mere mortals, but Dippen tells me via the Swedish papers that parties interested in Saab are most likely holding off until the outcome of that flashpoint is known.
With all of that in mind, ctm has provided some of his own background perceptions into recent reports surround interest from Geely in conjunction with a possible cash injection from a Sheikh in Dubai.

OK, so here is the situation…
Several different media now claims that Geely will bid on Saab. The deal is being brokered by Rothschild investment bank ( for which two former Volvo executives works (PG Gyllenhammar and Hans-Olov Olsson). Further, sources claims that Gyllenhammar left the board of Dubai based gigant MAF Group last week. The reason would be that he cannot be on the board when he broker a deal representing Rothschild when MAF Group somehow is involved. Other sources also claim that Gyllenhammar has actually met with representatives for the Al Maktoum family.
So why would former Volvo people broker a deal for Saab? Is the deal in fact for Volvo instead? Against that theory is the fact the Volvo is too big for Geely, while Saab is more the right size and cheaper.

Allow me a segue at this point…..
When I read the initial reports about Geely and former Volvo guy PG Gyllenhammar working for Rothschild to advise Geely on this bid, I had to ask the same question: why is a Volvo guy advising a Chinese company on a purchase of Saab?
The only answer I could figure out is that possibly he didn’t want them buying Volvo, so he’s aiding Saab in running interference for a Geely-Volvo thing.
It’s not as simple as that, though. Nowhere near.
ctm explains:

If Geely got Volvo Cars, they would market Volvo in China.
Volvo AB (read: Volvo Trucks – who also have something to say about the brand name Volvo) is already in bed with Dongfeng, the largest truck manufacturer in China. That’s because Volvo bought Nissan Diesel. For a long time, rumors have been that Volvo want to buy Dongfeng. Anyway, Volvo and Dongfeng would be linked. So there would be two Chinese manufacturers marketing Volvo product in China – which would be a mess.
That is why Volvo Trucks the other day again said they are very interested in the situation with Volvo Cars…..
…….All these rumors go back to the fact that there is resistance from US and Europe to let the Chinese control Volvo Cars – and the source for that resistance is probably Volvo Trucks.

Away from the politics and back to the transactional nature of things….
Geely are a pretty small company, having sold only double the number cars Saab sold in the last few years. Them buying Volvo would be somewhat like a mouse swallowing a cat. It’s probably not unheard of in car-buying circles, but Saab seem to be a more edible portion for a company of Geely’s size.
They’re also a private company, which is where the Sheikh comes in.
ctm’s thoughts, again:

……why Arabian money in a Chinese deal? My take:
1) Geely need money to finance the deal. Chinese government are reluctant to invest money abroad. It’s just the way they are. They are still learning. So Geely goes abroad. Arabian money becomes available since they will invest if the deal is good regardless of politics. They see a scenario where the huge Chinese auto market opens up, with Geely finding a way to the mass market in Europe with cheaper cars competing with low-cost brands from Eastern Europe and India.
2) Chinese companies still need a middleman in a deal like this, even if it’s in Sweden. Oil money will guarantee the long term financial and intellectual stability in the deal. Otherwise, interested parties in Sweden and the US will assume that the Chinese will just raid Saab for know-how and be very reluctant to sell.
3) It could mean that the deal is about more than Saab. There are good relationship between Sweden and Dubai, Bahrain, etc. The deal could be about green technologies for both the Arab nations and China. Sweden are world leaders and very well respected in China.
But, obviously Geely would only be one of those interested in Saab. But if they are in fact the only car company, then they are surely elevated to first place. Mu guess is that we will have names from official sources before the weekend.

As mentioned above, I think the bidders are waiting for the end of the month, but we may well know more about them this week.
There are other parties interested in Saab, so whilst we’re talking about this group, it’s mostly because that’s the one being reported about in the media. It gives us something to chew on.
These are ctm’s thoughts, mashed with mine and some input from Dippen, so they’re by no means conclusive. Hopefully they can be considered as informed thoughts, however, both by news reports and some local knowledge on the ground there in Sweden.
This is not a foregone conclusion by any means, but I thought some of this background info might be of interest in explaining some of the things we’re reading about at the moment.
Thanks to ctm and Dippen for the input!

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