Saab faces closure after GM deal falls through (Roundup)

Dec 18, 2009, 16:32 GMT

New York/Stockholm - US automotive giant General Motors said Friday the efforts to sell ailing Swedish subsidiary to a Dutch company had fallen through and said it planned an 'orderly' wind-down the company's operations.

The Swedish carmaker's 3,400 employees were to be laid off starting from January, GM said.

The announcement marks the third failure in recent months of the beleaguered US carmaker, now under majority ownership of the US government, to divest itself of a car brand.

Previous attempts by GM to sell its Saturn division and the Opel European Opel operations have also collapsed or, in Opel's case, been withdrawn.

The Detroit, Michigan-based GM said that it was 'still open' to new offers for Saab.

In Stockholm, the Swedish government expressed its dismay and anger. Enterprise Minister Maud Olofsson said that GM 'could have done more, as owner they have ultimate responsibility.'

'This is a very surprising decision, very regrettable especially for all employees,' Olofsson said at a news conference at Saab's main plant in Trollhattan, south-western Sweden.

'All the employees have really done what they could have done. It is GM that has taken this decision,' Olofsson said.

Victor Muller, chief executive officer of Spyker, said in a text message to Bloomberg financial news service: 'We were so incredibly close. I have no words.'

It was not immediately clear how long the winding down would take, but the Saab trademark stood to vanish if no buyer were yet found.

'We are still open to new offers,' a GM spokesman said.

The Detroit carmaker said Saab would honor warranties and provide service and spare parts for Saab vehicles already on the road.

GM's disclosure comes only a few days after the US company had indicated the possibility of a deal to sell Saab to the Dutch carmaker Spyker Cars. A previous attempt to sell Saab to Koenigsegg Group AB also fell through.

In a company statement, GM Europe President Nick Reilly said that 'despite the best efforts of all involved, it has become very clear that the due diligence required to complete this complex transaction could not be executed in a reasonable time.

'In order to maintain operations, Saab needed a quick resolution. We regret that we were not able to complete this transaction with Spyker Cars. We will work closely with the Saab organization to wind down the business in an orderly and responsible manner. This is not a bankruptcy or forced liquidation process,' Reilly added.

'We expect Saab to satisfy debts including supplier payments, and to wind down production and the distribution channel in an orderly manner while looking after our customers.'

Olofsson said the government had been involved in the process to find a new owner, which could take over from GM and carry through a new business plan.

'We have to shift focus and see how we can help employees and local municipality to look ahead,' Olofsson said.

Meanwhile Saab chief executive Jan Ake Jonsson said he was 'very disappointed.'

'Many of us have worked hard the past 15, 18 months. We were on the move, talks with Koenigsegg and new parties were intense,' Jonsson said, referring to the low-volume Swedish sports carmaker which in November had pulled out of talks about a possible acquisition of Saab.

'We are waiting for more information from General Motors on how they will proceed,' he said.

On Tuesday, GM chief executive Ed Whitacre had told reporters in Detroit that he had 'a sense it's possible' that a deal with Spyker Cars could be achieved.

The US carmaker had given itself until the end of December to decide on Saab's future.

Last month, a consortium structured around the Koenigsegg Group, a low-volume Swedish sports carmaker, surprisingly withdrew from talks with GM, casting the future of Saab into doubt.

GM's interest in Saab - one of Europe's smallest carmakers - dates back to the early 1990s. The company took full control in 2000.

GM said the Saab operations shutdown in Sweden would not affect an agreement announced last week for the sale of Saab powertrain technology and tooling to Beijing Automotive Industry Holdings Co.