Opel buyout talks collapse – danke GM!!

You European types are all over this already, I know, but for the late sleepers out there…..
German officials held 12 hour talks last night with the bidders for Opel and the end result of this marathon?
One potential owner withdrawing from the talks and quite possibly, the whole sale, and a 300million Euro hole.

Talks aimed at saving General Motors Europe’s Opel unit broke down amid acrimony between Germany and the United States on Thursday as fears mounted for tens of thousands of jobs across Europe.
The marathon negotiations were aimed at finding a suitable buyer for GM’s struggling European operations, with the German government willing to offer billions of euros (US dollars) in loan guarantees to any potential investor.
Two bidders, Italian car giant Fiat and Canadian auto parts maker Magna International remained in the race after a third bidder, Brussels-based investment firm RHJ International pulled out during the talks.
German officials blamed the breakdown on a last-minute request from GM for an extra 300 million euros (415 million US dollars) of funds for Opel, lashing out at General Motors for “scandalous” negotiating tactics.

“We are not amused” would be an understatement….

Speaking to reporters in the early morning, German Finance Minister Peer Steinbrueck said: “We were unpleasantly surprised when this new demand came out of the blue at 8:00pm local time (1800GMT). We found that pretty scandalous.”
“GM again confronted us with new figures,” said Economy Minister Karl-Theodor zu Guttenberg, adding that the US government “could have made more of an effort” with its choice of representative at the discussions.
“We have made a fresh request to the US Treasury and we expect a response before Friday,” he said, calling its input so far “marginal, to put it politely.”

I’m not sure there’s a limit to the number of people GM can annoy during one calendar year, but they’re sure exploring the outer limits.
New talks are scheduled for Friday, after the participants get a chance to catch up on some much-needed sleep, and in the case of the German officials, do some of that pesky running-the-rest-of-the-country stuff.
And for Saab…….?

GM fail to get bondholder support – will file for bankruptcy

We all knew this was coming as a result of recent events, but here’s the story on how it’s broken down in the last 24 hours.
From Automotive News:

DETROIT/NEW YORK (Reuters) — General Motors has failed to persuade enough bondholders to accept a debt-for-equity swap, setting the stage for the largest-ever U.S. industrial bankruptcy within days.
The event marks a critical disappointment for GM, once considered the bellwether of U.S. manufacturing….
…..The largest U.S. automaker had so far failed to gain anywhere near the 90 percent of bondholder support desired to stave off bankruptcy, two sources familiar with the discussions told Reuters on Tuesday. Bondholders had until midnight to make their final decision on the tender.
As of midday Tuesday, the source said the company had only a “low-single-digit” percentage interest from bondholders……
…..GM had no comment on the bond exchange. The automaker said it would detail results of the exchange today. Reuters sources said GM could file for bankruptcy some time after midnight Tuesday but before June 1.

——
From GM:

The exchange offers expired at 11:59 p.m. EDT on May 26, 2009, at which time the principal amount of notes tendered was substantially less than the amount required by GM to satisfy the debt reduction requirement under its loan agreements with the U.S. Department of the Treasury, to meet the debt reduction objectives under its viability plan, or to meet the minimum tender condition of the exchange offers as required by the U.S. Treasury. Since these conditions, as well as certain other conditions, have not been satisfied, the exchange offers will not be consummated.

——
Memo to GM – don’t take Saab down with you.
Make your final act where Saab is concerned a good one by choosing a good new owner.
It’s the least you can do after so many years of neglect.

Saab would welcome talks with Fiat

You know that personally speaking, I’m not keen on the idea of Saab being part of a Fiat megamerger involving Opel, Chrysler, etc etc.
I’ll prepare a proper “2 cents” entry shortly, but for the moment, I need to cover the news that Saab themselves would welcome a chat with Fiat.
From an article in Automotive News:

Sweden’s Saab Automobile, owned by ailing U.S. auto maker General Motors, would welcome talks with Italy’s Fiat S.p.A. about a takeover, Saab said on Wednesday.
Fiat, not among the 10 suitors currently in the race for Saab, has however not been in contact with Saab’s management, Saab spokesman Eric Geers told Reuters.
“But we are open for discussions. If Fiat comes into the picture, we would welcome a dialogue,” Geers said.

One of the issues at hand is the reorganisation process that Saab are currently involved in under supervision from the Swedish court system.
Saab’s initial reorganisation period concludes on May 20. It is anticipated that Saab would therefore go before the courts again on May 19 and seek an extension in order to continue the process whilst a deal with a new owner is finalised.
The question, therefore, is how this Fiat-chat would effect the buyer process that Saab are currently in the middle of.

Geers would not comment on whether Saab is pressed to present a letter of intent with a new owner by that date to be able to keep the automaker going, but said it was important to show evidence of progress.
“To prolong the reorganization period, it is important to disclose in more detail how far we have come. And, of course, the ownership issue is very important,” Geers said.

I’m still very, very cautious about this whole thing. It just doesn’t smell right to me.

Is this Fiat’s real plan for GM Europe?

It’ll be interesting to see how this one plays out….
A German newspaper, Frankfurter Allgemeine Zeitung, has published what it claims is a 100+ page internal report from Fiat, one which is rather quizically called “Operation Football”.
The plan was written in English (so that’s a little suspicious right from the beginning) and it reportedly shows how Fiat plan to benefit from the potential synergies they might gain from acquiring GM Europe.
This is from Reuters:

Italian carmaker Fiat SpA would cut some 18,000 jobs and 10 assembly and component sites at a combined Fiat/Opel company including both Vauxhall plants in England and two Fiat factories in Italy, a German newspaper reported…..
….The paper reports Fiat wants to gain access on the cheap to GM’s platforms on which it builds the Opel Corsa subcompact, the Astra compact and Insignia mid-size car. A further key aspect of the plan is acquiring GM’s Latin America operations.
According to sources on the Opel supervisory board, Marchionne also plans to put an end to GM’s Saab brand and its own Lancia brand over the longer term.

Fiat deny the report:

Fiat issued a statement saying the information in the report “does not come from Fiat and is not part of any plan prepared by the company.”

The jury is so way out on this one that we won’t know what’s going on here for some time to come, but the report does make a lot of sense on one level.
Fiat would definitely have to consolidate their operations once this merger was signed off. It’s the only way they can make it work. Otherwise, they’d have too much capacity and too many brands to manage.
The solution?
Get the tech expertise out of those brands and eliminate unwanted capacity.
Bottom line, this report may or may not be true, but the truth within it may remain even if it’s proven to be false.

Jan-Ake Jonsson – Fiat are not a party to negotiations

Jan-Ake Jonsson has come out in the Swedish press today stating that Fiat are NOT one of the parties they’ve been dealing with as a potential investor during their reconstruction process.
Here’s a translation from one of the many news sources carrying this story today:

Saab chief Jan Åke Jonsson denies that the ongoing talks with Fiat about a takeover of the kriserammede carmaker.
There are many serious buyers who will take over Saab Automobile, but Fiat is not among those who lead discussions with Nissan Saab, according to Jonsson.

Again, if Saab aren’t talking to Fiat, then why have the Sweish government been talking with Fiat about Saab?
It defies belief, to be honest.
I’m still trying to get hold of contacts at Saab Sweden, though these are very busy times.

The morning after – more thoughts and press on Fiat

I’ve been reading widely and chatting with a few interesting people about the whole Fiat-GME thing.
Here are some updated thoughts:
——
If Saab are to be believed, and I think they are, then it seems Saab were totally blindsided by this development with Fiat wanting to include them in a takeover of GM Europe.
If I were Jan-Ake Jonsson, I’d be beating a path to the Swedish government’s door tomorrow. It seems the government were talking with Fiat about this, presumably without Saab’s knowledge, as far back as two weeks ago!

Sweden’s government confirmed on Monday it has had contact with Italy’s Fiat (FIA.MI) regarding General Motors’ (GM.N) struggling Swedish automaker Saab.
“We have had contact with Fiat,” said Hakan Lind, spokesman at the Ministry of Enterprise, Energy and Communications. “The meeting was about Saab.”
Lind said the government had been in contact with Fiat a couple of weeks ago, but said nothing concrete had been decided. He declined to provide any further details.

——
Most news reports are now confirming that Saab are part of Fiat’s plans. I fail to see why or what difference they’d make.
The biggest concerns are in Germany, and not everyone’s happy about it.
From the Times Online:

The plans by Sergio Marchionne, the chief executive of Fiat, to combine a controlling stake in Chrysler with GM Europe along with Fiat’s own core mass-market car division in a separately listed spin-off were criticised by creditors of the bankrupt Chrysler in New York and by unions in Europe…..
….The CGIL union, the most significant among Fiat’s workforce, joined German labour groups yesterday in opposing Fiat’s proposal to build a supergroup. It is demanding guarantees that Italian plants stay open. Unions in Britain are also opposed to a Fiat takeover of GM Europe, which includes Vauxhall.

So that’s Fiat’s own union, as well as the British unions. What about the German unions, who aren’t known for being peaceful little wallflowers?
Associated Press:

IG Metall union official Armin Schild, who sits on Opel’s supervisory board, said on ZDF television that Fiat and Opel “are in the same markets with roughly comparable vehicles.” He added that “these two companies can give each other little, but take a lot away from each other.”

And then there’s Germany’s State economy minister Hendrik Hering:

it (is) “unacceptable if Fiat’s entrance is to be at the expense of an entire Opel facility.”

One of the big stumbling blocks will be that Fiat want to waltz in to GME and take a large chunk of it without running up any debt. They want government loan guarantees to cover operations.

Guttenberg said that “Fiat wants to get into this deal without debts of its own.”
He said the Turin, Italy-based company estimates the short-term financing needs — stemming from GM’s debts and pension obligations — at some euro5-7 billion ($6.6-9.3 billion) Europe-wide, which could be covered by loan guarantees from various governments.

He’s managed to do a similar thing with Chrysler in the US, buying in with promises but without spending any money.
I’m not so sure Europe will let him do this so easily, though.
——
And on that Chrysler link, the one body we haven’t heard anything from on this is the US government, who have helped broker a deal that gives Fiat a whole lot for no outlay. wouldn’t they be expecting Fiat to concentrate on their new American arm?
——
Marchionne went over to Berlin to speak with German authorities and try to convince them that his way was the best way.
The man he had to try and convince, Germany’s economy minister, Karl-Theodor zu Guttenberg, sounded less than enthused:

Fiat’s plans to take over General Motors’ European operations to create the world’s second-biggest car manufacturer will involve plant closures and substantial job losses, Germany’s economy minister, Karl-Theodor zu Guttenberg, warned today.
Speaking after a meeting with Fiat’s boss, Sergio Marchionne, in Berlin this afternoon, Guttenberg described the Italian group’s plans to take control of Opel, the German subsidiary of General Motors, as “interesting”.

——
Anyone else get the feeling that 2007/08’s candidate for world automotive domination, Carlos Ghosn, is watching all this with a thin smile?
“Let them play keystone cops” he’s probably saying, “and I’ll swoop in and pick up the pieces when they’ve worn themselves out”
Mwwwuuuuuhahahahhahhaaaaaaaahh!
——
The whole Fiat thing will rely on synergies Marchionne believes can deliver him cost savings in the future.
Read: platform sharing on a massive scale.
Now, platform sharing is going to be a necessary part of everyone’s automotive future, but read Automotive News’ prognostications of how it will look and it’s enough to make your head spin.

A shared lower-medium architecture would be a priority for a future Fiat-Opel deal.
Fiat has its C-Evo architecture, which was developed for the Alfa Romeo Milano. The Milano will replace the 147 next year. This could be possibly be offered to Saab but will not become the lower-medium volume architecture of the proposed alliance.
Most likely, Fiat will switch for its volume models to the platform Opel has developed for the next generation Astra….Fiat and Opel could aim for production of 1 million units also in the minicar segment, but this will take longer.
Fiat last year built more than 450,000 units of its 500 and Panda minicars. But Opel has just replaced the Agila minicar with another model based on a platform from Suzuki. This would delay a convergence until the middle of the next decade.
The eventual convergence could happen on the new generation of the Fiat A-architecture. This is due to debut in 2011 with the replacement for the Panda.

And that’s just the start of it.
This looks like GM all over again, just with a different accent and a better suit.
Not for me. Not for Saab.

GM/Saab response on Fiat’s plans for world domination

I’ve just woken up, so there’s every chance that this has been covered off in the last 7 hours, either in comments or elsewhere.
I couldn’t get hold of a Saab rep by phone last night as they were all busy, but this waiting in my inbox this morning.
In short:

We are not aware of any such discussion which includes Saab.

Now, I should add that the time stamp on this email suggests that it was sent just after I retired for the night.
Updates in comments suggest that Saab are part of Fiat’s plans. So if this email was written around 4-hours later, it might be different.
——
In long form:

“GM Europe is in talks with several possible investors. We see good and realistic interest of some of these possible investors. We have agreed to not communicate names of possible investors and we do not speculate about the timing of the negotiations. We also do not speculate about the content of the talks between the German government and the FIAT management.
GM Europe has developed a viability plan to ensure a long-term future of the company in the European market. As part of this viability plan, GME is continuing its discussions with potential investors to obtain funding to enable continued operations and with the German government regarding support. The initial outreach for third-party investors has been very promising. We expect that Opel/Vauxhall will become a significantly more independent part of a strong global GM product network as we navigate these very difficult economic times. GME is continuing negotiations with employee representatives regarding a reduction in labor cost. “

Saabs United is now up to date, and so are you.

More on Fiat/Opel and what it means for Saab

I’m still trying to get through to Sweden, but until then….
——
A vehicle analyst with the Gothenburg Management Institute has told E24 that he thinks it’ll be good for Saab if they are included in the proposed Fiat/Chrysler/GME super-merger.
No disrespect, but I think it’s nuts.
The Googletrans:

– My assessment is that Saab is not threatened, but on the contrary it is reasonable to assume that a Fiatägt Saab would like to expand and strengthen the brand Saab….
…. Opel, Vauxhall and Saab are fairly well integrated with each other. They have a lot of common components and platforms. There is no direct competition between Opel and Saab brand. I can see that there is some competition between Saab and Alfa Romeo, but it is very small volumes….
….Fiat group may in fact be the fresh start that Saab needs, according to Matts Carlsson.
– The reason is that there is no strategic gain to close down production in Trollhättan. It is necessary to have production and development there, I say not of nostalgic reasons.
– The platforms of the various brands is common is one thing, but the culture, development, and must stay where it is, stresses Matts Carlsson.

Maybe it’s just a bad taste in my mouth from previous experience, but I just don’t see his logic.
Saab haven’t benefitted – other than survival – from ownership by another large, multi-branded automotive company. Why would it work under this proposal? Saab and Opel don’t like working with each other much. Why would they under this proposal? How would these clashing cultures be resolved? By Marchionne’s say-so?
Sure, Saab and Fiat have worked together successfully in the past, but I’m not sure I see the synergies for the future. If Marchoinne has his way, Fiat are going to be a huge global conglomerate with so much work to do in order to realise any of the benefits that he forecasts from the merger.
How is Saab going to develop and nurture an identity in those circustances?
Unless Fiat are extraordinarily dedicated to making sure Saab develop, I really don’t see how Saab will be anything more than a slightly more luxurious subsidiary of the Opel operation.
——
The Local also have a report on this subject.
They’ve tried to speak to Eric Geers from Saab, who’s basically invited them to ‘speak to the hand’.

“I can not comment these details,” Fiat spokesperson Eric Geers told news agency TT.

And yes, that’s a Freudian slip of the highest order, eh?
I get the feeling that Saab have basically been blind-sided by this development. Annette Hellgren from the local union was a bit more forthcoming and illustrates the confusion pretty well:

“This line of reasoning is new to us. We have not heard this before, I have to say. We have however heard that Fiat is interested in Opel,” Hellgren said implying that there may have been some misunderstanding in the media, or at Fiat.

In the end, I think this is what it will boil down to. A misunderstanding between Fiat and the media as to the extent of this proposed deal.
That’s what I hope, at least.

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