Spyker's Takeover of Saab Sealed with EIB Loan of 400 mil. Euro; Buyer Looks to List Saab

The unlikely seeming takeover of General Motors's (GM's) Saab unit by the low-volume Dutch carmaker Spyker has been confirmed with the news that the European Investment Bank (EIB) has approved a 400-million-euro (US$547-million) loan to the Swedish carmaker. Spyker's takeover of Saab looked extremely unlikely to happen when it first announced its interest in December (see Europe: 3 December 2009: Bigger Cuts Likely at Opel Under New GM Management Regime; Spyker Confirms Saab Interest) following the decision of fellow low-volume supercar manufacturer Koenigsegg to pull out of negotiations to acquire the unit as it believed due diligence and the contractual issues involved could not be resolved in a timescale with which it was comfortable. In a statement released by Saab, Spyker's CEO Victor Muller said, "This was a crucial component in enabling the acquisition of Saab to proceed. Months of hard work have paid off. We cannot wait to close this transaction now as soon as practically possible." In the same statement Saab CEO Jan Ake Jonsson echoed Muller's comments. He said, "This represents another milestone along the path toward the creation of an independent Saab. This is very good news and everyone at Saab should feel very positive now." The deal for Spyker to acquire Saab involves US$74 million in cash and US$326 million in redeemable preference shares. However, the deal would not have gone through without the EIB loan being agreed

The loan approval from the EIB also followed another important staging post in completing the Spyker takeover of Saab. The Dutch company's shareholders met in the Netherlands to approve the terms of the deal with GM, with Victor Muller using the meeting to propose that Spyker delists from the Dutch stock exchange and relists the new combined Spyker-Saab entity on the London and Amsterdam exchanges. This indicates that Spyker is likely to use these listings to raise further capital to fund new model development, something that will be vital to quickly bring on much-needed new product. One that is required is the replacement for the company's main model, the D2-segment 9-3, which is notionally a competitor with other premium D-segment models such as the BMW 3-Series, Mercedes-Benz C-Class and the Audi A4. However, the 9-3, which was originally launched in 2002, is massively off the pace of these class-leading vehicles and Saab desperately needs a rapid replacement to generate meaningful volume growth.

Outlook and Implications

The news that the EIB has approved the 400-million-euro loan for Saab is the final building block of what is perhaps one of the less likely takeovers in the recent history of the global automotive industry. As has already been well documented, Spyker itself has struggled for credibility and profitability at times, indeed it has never itself managed to turn a profit, while manufacturing just a handful of cars. With the EIB loan and the company's US$200 million in cash and redeemable shares, Muller and Spyker claim that they have sufficient cash to fund their business plan for Saab. Spyker recently revealed that this business plan is based upon one developed by Saab's management over the past 10 months, and was supported by Spyker, its advisors Booz & Co. and KPMG Transaction Services, and several advisors to the Swedish government and the EIB (see Sweden: 3 February 2010: Spyker Gives Indication of Saab's Future Direction, Aiming for Profit in 2012).

Spyker is getting its hands on a genuinely iconic brand with huge untapped potential which GM continually failed to exploit in its two-decade tenure as Saab's parent company. It is also getting access to GM's state-of-the-art Epsilon II platform architecture which underpins the brand new 9-5, which will now be launched on the market instead of effectively being stillborn, as would have happened had GM followed through with plans to close down Saab. The company is also using GM's Delta II architecture to underpin the next generation 9-3, which Spyker has claimed will be ready for launch in two years. The model was originally also going to use the Epsilon II platform but Saab decided to switch to the Delta II platform as the Epsilon II architecture would have made the new 9-3 too large. The Delta II platform also forms the basis of the new Opel Astra and the Chevrolet Cruze. The 9-3 is Saab's main volume model, but slumping demand for it has been the main catalyst for a dramatic decline in Saab sales and production volumes in 2009, selling 39,903 units down from 92,000 units in 2008 and making just 20,791 units—production dropped as a result of inventory build-up as an increasing amount of unsold cars remained in dealers' showrooms.