Beijing Auto to Buy Some Saab Assets
BEIJINGóBeijing Automotive Industry Holding Co. has reached a tentative
deal to acquire certain assets of General Motors Co.'s Saab unit,
including intellectual property for two sedans and equipment to produce
those cars, according to a person with direct knowledge of the agreement.
The deal, sealed over the weekend in Sweden, will enable Beijing Auto,
one of China's main state-owned auto makers, to integrate the Saab
technology into its own vehicles. The agreement covers some models of
Saab's 9-3 compact sedan series and the current 9-5 midsize car, along
with their engines and transmissions, the person said.
Financial terms of the agreement weren't immediately available, but the
person said Beijing Auto plans to finance the acquisition in part
through loans from Chinese state banks, and noted that the company
already has a 20 billion yuan ($2.93 billion) line of credit from Bank
An announcement regarding the deal is expected to be made soon, said the
person, who added that Beijing Auto and GM were continuing to negotiate
over other possible aspects of cooperation on Sunday.
The deal is part of a broader push by China to create a small number of
globally competitive auto makers through domestic consolidation and by
acquiring troubled foreign auto makers or their technology. Chinese car
makers are gaining strength thanks in part to a home market that has
boomed as the rest of the world has sputtered. China's domestic
passenger-vehicle sales were up about 50% in the year's first 11 months,
and the country is on pace to post total vehicle sales of more than 13
million vehicles this year, surpassing the U.S. as the world's biggest
Zhejiang Geely Holding Group Co., a privately owned Chinese car maker,
was named by Ford Motor Co. in October as the preferred bidder for its
Swedish unit, Volvo. And a Chinese machinery maker earlier this year
struck a deal to buy GM's Hummer unit, although that deal still awaits
government approval. Beijing Auto was a leading contender earlier this
year to buy GM's Opel GmbH unit in Europe, before the U.S. company chose
another suitor, and, later, canceled the sale.
Selling Saab is a key element of GM's revitalization strategy, but the
U.S. auto maker has struggled to seal a deal. Last month Swedish
sports-car maker Koenigsegg Group AB unexpectedly dropped a separate bid
for Saab. Beijing Auto had been putting the finishing touches on a deal
to help Koenigsegg finance that acquisition, in exchange for which the
Chinese company was supposed to secure access to Saab's technology and
Other potential investors in Saab since the Koenigsegg deal collapsed
have included investor Ira Rennert's Renco Inc. and Wyoming-based
Merbanco LLC, founded by merchant banker Christopher Johnston. GM'S
bankers informed Merbanco about two weeks ago that it wasn't invited to
participate in further talks about Saab.
"We are negotiating on various aspects of Saab and will announce when
there is any further development," a GM spokesman said Sunday in an
email. He declined further comment "at this time."
The new deal between Beijing Auto and GM was put together over the
course of about two weeks after Koenigsegg pulled out, the person with
knowledge of the agreement said.
The person suggested an additional agreement may still be squeezed out
of the continuing discussions, which are taking place near Saab's
production hub in Trollhattan, Sweden. The person said Beijing Auto
President Wang Dazong is there leading the team from Beijing and is
"still exploring ways to reach further deals for cooperation." The
person declined to elaborate.
One element of this weekend's deal that couldn't be learned is whether
it will allow Beijing Auto to use the Saab name in China or elsewhere.
It wasn't immediately clear whether Mr. Wang in the continuing talks is
trying to acquire a right to use the Saab name, or the rest of Saab's
Some reports have said the partial sale of Saab technology and other
assets could lead to the end of Saab, with its other assets, including
its headquarters, liquidated. That outcome, the reports have said, could
threaten at least 3,000 Saab jobs in Sweden.
Beijing Auto was China's first auto maker to team up with a foreign
counterpart, when it partnered 25 years ago with then-American Motors
Corp. to produce and sell Jeeps in China. But it has failed to develop a
strong brand of its own, even as rivals such as Shanghai Automotive
Industry Corp. have roared ahead.
Beijing Auto's main businesses now are joint ventures with Hyundai Motor
Co. and Daimler AG's Mercedes-Benz unit, as well as a heavy-truck
producer called Foton. Beijing Auto's own brand is a minor competitor in
China's domestic market, with only a small lineup of aging sport-utility
Mr. Wang, in an earlier interview with The Wall Street Journal, has said
that developing a strong brand would require foreign technology and
know-how, which is best achieved by buying into a troubled overseas auto
maker. He cited Shanghai Auto's development of its Roewe brand using
technology from MG Rover.