In a second Chinese attempt to bail out Saab, Pang Da Automobile, China’s largest-listed auto distributor, has inked a distribution and manufacturing partnership with Spyker Cars, owner of the Swedish carmaker.
Pang Da will shell out up to €110 million ($156 million) for Spyker’s equity as well as an immediate inventory of Saab-branded vehicles, which it will sell through its network of distributors. The deal follows only days after an agreement for Hawtai Motor Group to buy a strategic stake in Saab collapsed.
“Our size, financial strength and competence in addition to our ability to move fast will be crucial to Saab’s success in China,” said Pang Qinghua, chief executive officer of Pang Da in a written statement. “Having just gone public ourselves three weeks ago, we are delighted to have the opportunity to become a substantial shareholder in Spyker, Saab’s parent.”
The Chinese company, which has 1,100 car dealerships across China, will set up an equally owned distribution joint venture with Spyker, as well as a manufacturing joint venture.
The manufacturing JV will make Saab-branded vehicles, as well as launching a new brand in China. Saab will own up to 50% of the manufacturing business and Pang Da, plus another yet-to-be named partner, will own the balance.
Pang Da will pay Skyper €30 million to buy a batch of Saab vehicles immediately and is expected to pay another €15 million to buy more within 30 days. The immediate payment is intended to let Saab to restart production, which it had to suspend due to a cash crunch. Pang Da will also take a 24% equity stake in Spyker for an outlay of €65 million, translating to a price of €4.19 per share, which is the weighted average of the past 10 trading days. The share subscription by Pang Da is intended to meet Saab’s medium-term funding needs.
The deal is still subject to regulatory approvals, including those from Chinese governmental agencies. And these are by no means a given. Early this month, Hawtai had said it would buy up to 30% of Spyker Cars for €150 million to gain access to Saab’s manufacturing, technology and distribution. Hawtai is a Beijing-based privately owned automobile firm. But on May 12 the two firms announced they would not be proceeding with the deal. Spyker said in its press release that Hawtai could not secure the necessary approvals.