GM Sued by Spyker Over Failed Saab TakeoverVW Staff
On Monday, Spyker Cars NV (AMS:SPYKR) filed a suit against auto giant General Motors Company (NYSE:GM) for $3 billion in damages. This comes after the failed $74 million, 2010 takover of Saab which ultimately ended in bankruptcy.
Spyker has alleged that GM unfairly prevented deals that would have allowed a Chinese manufacturer to take over Saab’s production and ultimately prevent bankruptcy. The company also said that General Motors Company (NYSE:GM) worried about Saab as a competitor in China.
The lawsuit has been filed in United States District Court of the Eastern District of Michigan, GM’s home turf.
In a statement by Spyker NV (AMS:SPYKR), it said via the Associated Press, “Since Saab Automobile is in receivership… Spyker and Saab have entered an agreement pursuant to which Spyker will bear the costs of such litigation in exchange for a very substantial share of Saab Automobile award when the proceedings are successful.”
The company will get financial backing from a third party that will “see the lawsuit through to the end.”
Why is Spyker seeking $3 billion? This comes from the value of Saab if a deal with Chinese investors had been executed. Spyker CEO Victer Muller said via The Guardianthat “General Motors Company (NYSE:GM) created the appearance of initially encouraging Saab to enter into a deal with Chinese investors to save the company, only later to unlawfully pull the rug out from under Saab, driving it into bankruptcy liquidation.”
He added, “We owe it to our stakeholders and ourselves that justice is done. We tirelessly worked to save Saab Automobile until General Motors Company (NYSE:GM) destroyed those efforts and deliberately drove Saab Automobile into bankruptcy.”
In a deal that went wrong, when selling Saab, GM kept a say over its technology utilized by the company; this included the chassis in most of its cars. It also retained $327 million of its preferred shares in Saab. Payments were to begin many years after the sale should Saab become profitable.
That didn’t happen but what has taken place in the last two years under Spyker’s ownership of Saab?
It went south as consumers expressed concern about purchasing cars from an automaker that didn’t look like it would be in business for the long-term. The Swedish company went bankrupt at the end of 2011 and now National Electric Vehicle Sweden AB is buying it.
Neither Spyker NV (AMS:SPYKR) nor Saab has seen a profit. With the 2010 takeover, many analysts expressed skepticism that Spyker would be the catalyst for a Saab turnaround. But there were concerns that included a lack of quality to go up against high-end luxury automobiles and not enough volume to become a challenger in the upper-middle class market.
While Saab’s financial condition became increasingly grim, Muller looked around for a Saab buyer.
GM was also facing its own financial problems at time and had filed for bankruptcy in June 2009. It is slowly on the road to recovery and on Monday, announced that it has been finding success in China as it reported strong July sales.
According to the Wall Street Journal, the company said it, along with joint ventures, sold 199,503 vehicles in July, up 15% from the previous year. It also represented a record for the company.
Analysts believe GM’s sales growth in China came from a strong minivan demand produced by SAIC-GM-Wuling Automobile Co., which is a joint venture between GM, SAIC Motor Corporation Limited (SHA:600104) and Liuzhou Wuling Motors Co.
In addition, overall China sales, which includes passenger cars and commercial vehicles, increased 2.9% in the first six months (January-June), up from the previous year, to 9.6 million units.