Transactions | GM Authority

Another One To The Automotive Graveyard: GM Officially Announces Wind Down Of Hummer
by Alex Luft
Posted February 24th, 2010 at 3:55 pm

After this morning’s rumors that GM’s sale of Hummer to Sichuan Tengzhong Industrial Machinery Co. was not approved by Chinese regulatory powers that be, The General has just announced that it will begin the orderly wind down of Hummer operations. According to John Smith, GM Vice President of Corporate Planning and Alliances,

One year ago, General Motors announced that we were going to divest HUMMER, as part of focusing our efforts on Chevrolet, Buick, GMC and Cadillac going forward. We have since considered a number of possibilities for HUMMER along the way, and we are disappointed that the deal with Tengzhong could not be completed. GM will now work closely with HUMMER employees, dealers and suppliers to wind down the business in an orderly and responsible manner.

As we learned with the Saab Sales Saga, this may not mean anything in particular, as a last-minute buyer may swoop in to save the company from the automotive graveyard, where Saturn and Pontiac shamefully lie. Nevertheless, GM will continue to honor Hummer warranties as well as providing service support and spare parts to current owners around the world.

Stay tuned as it happens…

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Rough Terrain: GM’s Hummer Deal With Sichuan Tengzhong Apparently Denied By Chinese Authorities… Maybe Not
by Alex Luft
Posted February 24th, 2010 at 1:51 pm

Chinese regulators have failed to approve General Motors’ proposal to sell Hummer to Sichuan Tengzhong Heavy Industrial Machinery Co., according to two people close to the deal.

The approval was the last hurdle for the deal to go through, which would transfer ownership of the legendary American SUV brand to the privately-owned Chinese maker of special-use vehicles, structural components for highways, bridges, and construction equipment for only $150 million. This amount is nearly 70 percent less than GM originally valued the brand in bankruptcy court in the summer of 2009.

In the beginning of 2010, GM extended the deadline for the sale until the end of February. (more…)

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At Odds: Plan To Keep Shreveport, LA Plant Alive Rides on Chinese Approval
by Wilson Nunnari
Posted February 23rd, 2010 at 7:02 pm

Hummer’s sale to Sichuan Tengzhong Heavy Industrial Machinery comes with a boatload of baggage. GM’s finances, jobs, and the brand’s continued existence are only a few of the major items on the line. Under the “jobs” category is the Shreveport, LA plant. If the deal with the Chinese industrial machinery firm does not go through, the facility will be shut down. Officials expect the sale to be completed by the end of Q1 2010, with the Chinese government remaining the only roadblock to the transaction.

The plan to keep Hummer manufacturing at the plant may bring with it the production of other brands at the facility, as Sichuan Tengzhong would only need 25 percent of the capacity for Hummer production. The Shreveport Times describes the plant as an “automotive mall with Hummer as the anchor tenant.”

Recently, incentives have been discussed with the involved companies. An exemption from sales tax on equipment and donated land for plant expansion are the in the cards. This, however, may not be enough to plan against the $40-200 million that have been estimated as layouts for plant upgrades. Plans to upgrade the facility are secondary to the Hummer deal, which has a ticking clock built in.

While a repeat of the Saab Sales Saga would be acceptable, the delays and back-and-forth waffling would sure be nice to avoid. At least this time The General won’t make any announcements to wind down the brand until the Chinese government approves of the deal.

[Source: Shreveport Times]

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Done Deal: Spyker Officially Acquires Ownership Of Saab, GM Authority To Officially End Coverage
by Alex Luft
Posted February 23rd, 2010 at 2:01 pm

General Motors and Spyker Cars NV have announced today that they have finalized the deal for Spyker’s purchase of Saab.

This means that, going forward, Spyker has taken over the reins and has assumed full responsibility for the (not so much) Swedish automaker.

John Smith, GM Vice President For Corporate Planning and Alliances, had the following to say about the development:

This transaction represents the successful outcome of months of hard work and intense negotiations, all aimed at securing a sustainable future for this unique brand, and we are pleased with the positive outcome. This is a great day for Saab employees, dealers and suppliers, and a great day for millions of Saab customers and fans worldwide.

GM Europe President Nick Reilly also chimed in, saying:

Throughout negotiations over the past year, GM has worked with many parties, including governments and investors, to find a solution for Saab. I’m very pleased that we could come to a positive conclusion, one that presents a viable future for Saab and preserves jobs in Sweden and elsewhere.

And this will officially put an end to GM Authority’s coverage of all things Saab… starting immediately. Unless, of course, GM has a sudden change of heart and decides to buy the brand back. But we’re not holding our breath.

Check out the full press release after the break! (more…)

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Opinion Desk: GM As A Hostage Taker?
by Conor Cameron
Posted February 22nd, 2010 at 11:03 am

While playing the American President in the movie Air Force One, Harrison Ford delivers a speech declaring that America will not negotiate with terrorists. When Russian terrorists high jack the supposedly impregnable aircraft, threatening the safety of his family, he retreats from his previous position. The terrorists want the President to release their destabilizing leader, the deposed former military leader of Russia. The President agrees, but when he asks that the terrorists release his family, they refuse, saying, “We have many more uses for you now that we know that you are willing to negotiate.” According to Forbes International Affairs writer Jens Laurson, and 1996 Presidential-hopeful Bob Dole’s former economic advisor George Pieler, this movie moment explains perfectly what The General is attempting to do to European governments, particularly Germany. (more…)

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GM Agrees To Extend Hummer Deal Deadline
by Alex Luft
Posted February 1st, 2010 at 1:28 pm

GM has agreed to extend the deadline for the sale of Hummer to Sichuan Tengzhong until the end of February. According to Reuters, The General allowed Sichuan Tengzhong Heavy Industrial Machinery Co. – a little-known maker of heavy machinery in southwestern China – to have some more time to complete its purchase of the legendary SUV brand.

Tengzhong signed a contract with GM to buy Hummer back in October 2009 and has been waiting for a green light from Beijing to approve the deal. This original contract expired January 31, 2010.

Rumor has it that Chinese powers-that-be aren’t content to acquire a gas-guzzling brand at a time when fuel-efficiency is all the rage. Tengzhong better work hard and speed up the Chinese bureaucratic process if it wants to get a taste of a global automotive brand. Cuz – you know – February is only 28 days long in 2010 – no matter where you are!

[Source: Reuters]

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Updated: Officially Official: GM Sells Saab To Spyker
by Alex Luft
Posted January 26th, 2010 at 1:56 pm
It’s over, done, finito! After months of negotiations, protests from Saab owners, and numerous ups and downs, General Motors just confirmed that it has reached a binding agreement to sell Saab Automobile AB to Spyker Cars NV.

Spyker has outlasted all other negotiators in this deal, including Koenigsegg, Genii Capital (backed by Bernie Ecclestone), and Merbanco. What’s more, Spyker’s persistence in tirelessly trying to work out a deal and submitting revisions upon revisions of bids – sometimes at the last minute – have all paid off. Ironically, Spyker also outlasted GM – which began winding down Saab in late 2009.

As part of the transaction, Spyker will form a new company called Saab-Spyker Automobiles that will be in charge of the Saab brand. The sale will be subject to customary closing conditions and regulatory, governmental, and court approvals.

Complete details of the deal have not yet been fully disclosed (GM says they will be disclosed in due time), but we’re hearing that Spyker paid $74 million in cash and provided GM another $326 million in proffered stock of the new Spyker-owned firm. The agreement is contingent upon the approval of a 400-million-euro loan from the European Investment Bank to Saab-Spyker. Vladimir Antonov, chairman of the Spyker board and the biggest backer of the Dutch exotic car maker, has agreed to step down and sell/relinquish his positions (although we’re not totally clear on this yet).

At the present, the Swedish government is in the process of reviewing the transaction. If everything goes according to plan, the deal is expected to close in mid-February. GM will immediately suspend Saab wind down activities pending the closing of the transaction.

The GM Authority Take

How quickly things can change! Just yesterday, CEO Ed Whitacre wasn’t ready to announce a deal and even stated that wind down operations of the Saab brand are ongoing. This news is great for all parties involved:
- GM becomes a leaner company, gains some cash in the process, and walks away with its tail between its legs (but is still able to look Saab fans in the eye)
- Saab is saved – along with the all-new 9-5 and 9-4X, its 1000+ dealers, and 4000+ employees, while
- Spyker acquires a legendary brand with strong brand recognition and Saab’s excellent engineers.
Personally, I can’t wait to see what awesome new products a Saab under Spyker comes out with, but I’d bet that they’ll be better than those a GM-owned Saab ever dreamed of. Stay tuned to this week’s GM Authority Weekly Podcast for the team’s thoughts and analysis.

Check out GM’s full presser after the break!

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Saab Production Continues to Continue
by Wilson Nunnari
Posted January 26th, 2010 at 1:08 pm

Over the last few months, Saab’s future has been more uncertain than Britney’s mental status. But, like Britney, Saab appears to be on the upswing. A potential sale seems to be mere days away and production of two new models supports this hopeful and likely assumption. Media sources are reporting that production of the new 9-5 continues alongside 49 units of the new 9-4X crossovers. Wait, what’s that? More new models for a brand that is supposedly being shuttered seems a little unlikely.

Although the addition of any new models to the Saab lineup is shocking (the only truly new model for the brand since GM took over is the 9-3), the fact that production is continuing and growing point to a successful sale in the near future.

It was slightly surprising that CEO Whitacre did not announce a sale last morning at his press conference, maintaining the ambiguity surrounding the Saab sales saga. Barring another 11th hour pull-out, Saab will most likely go to Spyker, and will hopefully close in the next week.

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GM To Pay Back Canadian and U.S. Loans By June, No Saab Deal (Yet)
by Alex Luft
Posted January 25th, 2010 at 1:09 pm

During this morning’s press conference, GM CEO and Chairman Ed Whitacre announced plans to repay the company’s U.S. and Canadian government loans as early as June 2010. The General received $6.7 billion from the U.S. federal government last year.

Whitacre was very optimistic about The General’s future, citing a stabilized market share even after cutting its brand portfolio in half last summer. He also told reporters that GM is “well ahead of metrics outlined in our viability plan,” something that “makes all of us happy.”

After announcing his permanent appointment to the position of CEO, Whitacre gave a very succinct update on Saab, saying that talks with Spyker Cars are ongoing, but the two companies have no deal to announce as of this morning. Whitacre added that “as of today, we have not changed the direction on the wind-down of the operation.”

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Light At The End Of The Tunnel: Spyker Nears Deal With GM For Saab
by Alex Luft
Posted January 25th, 2010 at 10:18 am

In what just may turn out to be a miracle, Spyker Cars has come one step closer to closing a deal to acquire Saab from GM.

According to Bloomberg, GM and Spyker officials met in Stockholm over the weekend to finalize details of a plan to sell the Swedish automaker to Spyker, and it looks like it’s the real deal this time.

For what it’s worth, Bloomberg is citing two sources close to negotiations that peg the net worth of Spyker’s offer for Saab at $500 million, made up of cash and stock. As part of the deal, Spyker would allegedly pay $75 million in cash and $325 million in preferred stock in exchange for Saab. It’s unclear where the remaining $100 million will come from.

But the purchase comes with strings attached, which – in this case – are made up of the following two contingencies. First up is Vladimir Antonov – a Russian businessman who serves as Spyker chairman and is also the largest investor in Zeewolde. Reportedly, he must leave Spyker for the deal to go through. Second is a loan from the European Investment Bank to Spyker-Saab that will be necessary for Spyker to integrate Saab appropriately.

Moreover, Genii Capital, backed by F1 tycoon Bernie Ecclestone, has formally conceded from the bidding, with Lars Carlstroem telling Bloomberg the following:

We have worked hard, unfortunately time was not on our side. We are pleased to hear about Victor [Muller, Spyker CEO] and his attempt to buy Saab. He’ll be a perfect owner for Saab going into the future.

Genii joins the growing list of bidders that have dropped out of the bidding process for Saab, including Wyoming-based Merbanco and Swedish exotic supercar maker Koenigsegg. China’s BAIC was the backer of the Koenigsegg deal, but when that fell through, decided to purchase $200 million worth of Saab technology and tooling for older Saab models such as the last-gen 9-5 and pre-2006 9-3. Meanwhile, production of the all-new 9-5 sedan has begun in Sweden.

Hit up the break for our legendary GM Authority take!

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The GM Authority Take

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