STOCKHOLM — Saab Automobile, General Motors Corp.'s struggling Swedish unit known for its family cars, was rescued Tuesday by a consortium led by Koenigsegg Automotive AB, a tiny company that produces only a dozen custom-made super cars a year.
Having penned a memorandum of understanding, GM said the sale would include an expected $600 million funding commitment from the European Investment Bank, guaranteed by the Swedish government. Additional funding for Saab's operations and investments would be provided by GM and the Koenigsegg Group AB consortium, it said.
"This is yet another significant step in the reinvention of GM and its European operations," GM Europe's president, Carl-Peter Forster, said in a statement.
A person briefed on the deal said GM will get nothing initially for Saab, but would be paid $150 million, capital Saab had left over from GM's ownership, on top of the value of Saab's assets if the new company turns a profit.
GM bought a 50 percent stake in Saab for $600 million in 1990 and acquired the rest for $125 million in 2000. GM CEO Fritz Henderson said GM could build another car for the Saab brand.
The company fronting the consortium, Koenigsegg Automotive, was founded in 1994 by Christian von Koenigsegg, a Swedish sports car fanatic and entrepreneur, who remains the chief executive. It makes luxury sports cars at its headquarters near Angelholm in southern Sweden.
With a full-time staff of 45, Koenigsegg makes around a dozen cars a year, customized for every buyer. The company doesn't advertise prices, but they are believed to range between $1 million and $2.3 million each.
Saab, on the other hand, has more than 4,000 staff worldwide, is represented in some 50 countries, and typically produces more than 100,000 cars a year.
Saab chief executive Jan Ake Jonsson called the deal "great news" and said it would help the brand to maximize its potential "through an exciting new product lineup with a distinctly Swedish character." The sale is expected to be completed by the end of the third quarter and is subject to regulatory approvals.
Nelson Silveira, a GM spokesman in Zurich, declined to give any financial details and would not disclose information about the investors.
Matts Carlsson, an analyst of Goteborg Management Institute, called the deal "exciting, interesting and challenging," adding that although no price sum has been made official, the Trollhattan, Sweden-based unit is likely to have been more or less a giveaway.
"(Money) is not really what it's about right now. It's about the possibility to back up this deal," he said.
Carlsson has, along with other market watchers, voiced criticism of the idea of a small sports car maker taking over the reins of a large company such as Saab. More specifically, market watchers wonder how reliable the consortium will be and whether it has the finances to see the deal through.
"We still need to find out if they have the financial muscles," Swedbank Market analyst Anders Bruzelius said.
Koenigsegg did not return telephone calls seeking comment but told Swedish news agency TT that the group has the resources it needs.
Other analysts, such as Global Insight's Tim Urquhart, called it the "the best possible outcome for Saab," describing Koenigsegg as a respected company with a sensible financial structure.
"Koenigsegg certainly faces a massive task in returning Saab to a state where it is a profitable and vibrant premium passenger carmaker," but said it could revitalize the brand and steer it into greener technologies.
"The trick will be to position the brand at a price point where it can become profitable at the 120,000- to 150,000-unit mark and offer enough 'unique' technology and design identity to make the brand compelling," he said.
Originally an aircraft maker, Saab started manufacturing cars after World War II. The aircraft division remains a different company.