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Saab Deathwatch Ends...With a Sale to Tiny Spyker

The long Saab deathwatch is over and it has produced, surprisingly, life. Despite all the dire predictions, General Motors has signed a deal to sell the Swedish automaker to Holland-based Spyker Cars for $74 million in cash, plus a $566 million loan from the European Investment Bank, complete with a guarantee from the Swedish government.

When the deal is done, GM will also retain redeemable preferred shares of Saab stock of $326 million (which is less than one percent of the voting rights for Saab capital).

A long, strange trip, indeed. According to John Smith, vice president of global planning and alliances at General Motors, the automaker has been entertaining offers for a year, but had decided its best bet was "winding down" the venerable and somewhat quirky company. Few had expected Saab to survive, and given its reduced product line and long dependency on GM, its prospects for the new company, to be called Saab Spyker Automobiles, are still not great.

According to James Bell, executive market analyst at Kelley Blue Book, "The news that Saab will live to see another day is great for consumers looking for individuality. A bright spot for Saab, and potentially why Spyker worked so hard to acquire it, is some of the solid new product in its GM-based pipeline. The challenge will be to inject the revered Swedish tradition for eloquent style and simplicity into vehicles technically similar to the Buick LaCrosse and Cadillac SRX."

Smith called Saab "an iconic brand," and said it "has never been in a better spot for new model cadence, which give Saab a shot at a sustainable future." He praised new models such as the revamped 9-5, and said there would be no break in parts and warranty coverage when the transition occurs.

London-based analyst Mike Tyndall of Nomura Securities says that the future of Saab "is still very uncertain. Spyker saved them for now, but they still have to address the underlying problems of the business, which are lack of scale and lack of profit."

Saab never fit comfortably into GM's fold, and the cars produced under its ownership lost their edgy, distinctive quality. Spyker CEO Victor Muller said his first order of business will be restoring what he calls the car's "Saabish" virtues--presumably including such quirks as a floor-mounted ignition key.

The first disappointment was when tiny Swedish sports car company Koenigsegg (backed by Beijing Automotive Industry Holding Co., which later bought some Saab technology for $200 million) pulled out of a tentative deal in November. The death rattles got particularly loud after the first attempt to reach a deal with Spyker fell through late last year. Here's a Reuters timeline.

Of particular concern in early talks with Spyker was the presence of a certain Russian investor, Vladimir Antonov, who is Spyker's chairman and largest investor. Although Smith side-stepped a question about his involvement during a conference call today, GM had demanded his removal from the deal--and is reportedly getting it. Muller's own Tenaci Capital BV is taking over 4.6 million Spyker shares owned by Antonov, who according to Spyker is stepping down.

The deal is supposed to close in mid-February, at which time Spyker's first $50 million installment will be paid. The second installment, $24 million, will be paid July 15. "We are delighted to have secured the jobs and livelihoods of thousands of loyal Saab employees, suppliers and dealers," Muller said, "and to have given reassurance to the 1.5 million Saab drivers and enthusiasts around the world."

Asked why more bidders hadn't come forward during the year the doors were open, Smith said, "It wasn't a great year economically for anyone in the car business. In the time Saab has been available, most companies [that could have made a play for the company] were presiding over their own restructuring efforts."