Summary: Saab deals with Pang Da and Youngman

Saab have made several announcements in regard to deals made with Chinese companies Pang Da and Youngman since mid-May. These deals have changed slightly in nature as each new announcement has been made and I thought it might be useful for those interested in Saab business to track the dynamic nature of the deals.

Please note that these are just dot-point summaries and not detailed examinations of the conditions associated with each deal. They are treated this way to quickly and easily present significant changes to the deals where these have occurred.

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May 16 – Initial MoU with PangDa

  • Memorandum of Understanding signed with Pang Da (non-binding)
  • Includes a strategic alliance consisting of a 50/50 distribution joint venture (DJV)
  • includes provision for a manufacturing joint venture (MJV) for Saab branded vehicles as well as for an MJV-owned brand (the so-called ‘child brand’) in China.
  • Saab Automobile will have up to 50 percent in the MJV, with Pang Da and a to-be-selected manufacturing partner owning the remaining shares.
  • Pang Da purchase 30million Euros worth of vehicles with an option to purchase 15mil Euro more within 30 days.
  • Pang Da to take 24% stake in Spyker (subsequently renamed Swedish Automobile) valued at 65mil Euros

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June 1 – Pang Da Advances additional order

  • Pang Da exercise option to purchase 15mil Euros worth of additional vehicles as per the May 16 deal.

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June 13 – Addition of Youngman to May 16 MoU

  • Youngman to take 29.9% ownership interest in Swedish Automobile, valued at 136mil Euros
  • Pang Da retain their right to a 24% ownership interest, however the cost of this 24% investment by Pang Da is raised from 65mil Euros to 109mil Euros because of additional equity to be contributed by Youngman.
  • Distribution joint venture moves from 50/50 between Saab and Pang Da under the initial agreement to a tripartite DJV – Saab 33%, Youngman 33% and Pang Da 34%
  • Manufacturing joint venture conditions change to see Saab Automobile and Youngman each have a 45% interest (Saab was to have a 50% interest under the initial agreement) and Pang Da hold the remaining 10%.
  • MoU is subject to conditions before being confirmed as a binding agreement. Agreement will be subject to regulatory approvals in Sweden and China.

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July 4 – Binding agreement on equity, addition of NPJV

  • Equity components of previous MoU now converted to binding agreements. These are still subject to regulatory approval, which all parties are working on and expect to receive in coming months.
  • Parties continue working towards execution of binding agreements for a strategic alliance consisting of a tripartite distribution joint venture and a tripartite manufacturing joint venture for Saab-branded and child brand vehicles in China.
  • Saab and Youngman make conditional agreement on a 50/50 new product joint venture (NPJV) that will see three new models developed – identified as Saab 9-1, Saab 9-6 and Saab 9-7. Saab will contribute design, development and testing expertise and Youngman will contribute finance.
  • Agreement on NPJV is also dependent on regulatory approvals, which is expected in a timely manner.

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I hope that helps to clear up the nature and current status of the deals, which have steadily increased Saab’s partnership with Pang Da and Youngman. As noted in the most recent release on July 4, this broad base and increased co-operation is expected to provide better conditions for the entry of Vladimir Antonov into the ownership group, which will only further increase Saab’s stability into the future.

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11 Comments

    1. Difficult to tell from just model numbers, but my guess would be that the 9-7 would be for China only as the 9-5 is large enough already. The rest of the models would probably be made both in China (for the local market) and at Trollhättan (rest of the world).

  1. I wonder to what extent Saabs will continue to be Saabs as we know them under these arrangements and also how long it might be before all manufacturing is transferred to China and the Trollhatten factory closes.

    1. No need to be so fatalistic, DRM.  As you can see from the release, the new vehicles will all be designed, developed and tested here in Sweden and I’m quite sure that if Saab wish to remain as a global premium brand then they will realise the need to maintain a manufacturing presence here in Sweden as well.

  2. Swade, your last sentence was the most interesting – “better conditions for the entry of Vladimir Antonov into the ownership group”.  Are you saying that Antonov will not be approved by the EIB to invest in Saab until the Chinese deals are approved by the various agencies?  I’m not understanding how the deals affect Victor Antonov as an investor.  My understanding was that Antonov is ready to invest now.

    1. Vladimir Antonov is indeed ready to invest now and has been since late 2009.  For whatever reason, the EIB has been reluctant to allow that despite his clearance by the National Debt Office in Sweden and by GM.  It is believed that this broader base of ownership and financial resources should make that decision easier for the EIB to make.

      1. So, we’ve two of the four agencies approving Antonov.  We’re halfway home.  Perhaps things will move more smoothly now that Saab is high on the EIB agenda.  This waiting game has gotten old.  However, I’m glad to read all of the good news lately.  Saab really is like the Phoenix, arising from the dead.  Next is to restart production.  I can’t wait to to see the new 9-5 SC arrive.

  3. Well done, Steven!  Nice to get the bullet points out there to make the deals/relationships easier to comprehend.  Makes me wonder if you had to run this one by the legal department first just to make sure everything lined up properly.

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