GM admits: We were just being asshats

GM have given an initial response to Spyker’s $3billion lawsuit and in doing so, have pretty much confirmed what many of us might have thought.

You might remember back in 2009, when Saab were being sold, that GM withdrew from negotiations at one point, supposedly because of concerns with Vladimir Antonov being part of the Spyker bid.

Shortly thereafter, Vladimir Antonov left the Spyker group and Spyker re-submitted their bid, one that they stated met GM’s needs completely. There was no reason not to proceed with the sale. The price had been agreed, their concerns had been met. And yet, GM still called negotiations off and placed Saab in liquidation just before Christmas (a move that was not only completely unnecessary, but one that made the job of re-starting Saab that much harder in 2010). Thankfully, Spyker didn’t give up and the spotlight was on GM to find a way to get some sort of return for one of the four brands the government forced them to either sell or close as part of their bailout.

Fast forward to 2011 and once again, Saab is in trouble. GM have a decision to make and Spyker claim to have submitted a proposal to them that would safeguard their concerns and satisfy any objections they might have.

That deal was to save the Saab company and get Youngman in as an investor.

GM played hardball, saying that they had to protect the interests of their shareholders and that they wouldn’t allow Saab to continue producing the 9-5 and 9-4x if the deal progressed. Those statements pretty much scuppered the deal; Youngman got cold feet, pulled out and forced Saab into bankruptcy.

GM’s objections, based on protecting shareholder value, could have only been based on either protection of IP or protection from competition.

Protection from competition is a joke. Saab would never have been a competitive threat to GM.

Spyker’s deal would have quarantined GM’s intellectual property whilst bringing Youngman in to finance the ongoing development of the Phoenix platform. As soon as Saab didn’t need GM’s technology anymore, they would have jettisoned it safe from competitive eyes.

GM’s words in response to Spyker’s claims are telling. From Reuters:

In its response on Friday, GM dismissed the idea that its technology would not be shared with the other investors under the proposed Spyker deal.

“Putting aside whether this argument is factually wrong, it misses the point,” GM said, adding that it had the right to terminate its technology license and supply agreements with Saab if there was a change in control of Saab with[out] GM’s prior consent.

“This right was clear and absolute, and did not depend on how GM’s technology purportedly was being handled,” GM said.

GM’s technology could indeed have been quarantined and they know it. Just because Youngman could walk into a factory and see a Saab being built does not mean they could replicate it. That requires a level of information and expertise that definitely could have been protected.

But that’s not the important bit here.

In GM’s own words, they had the right to terminate irrespective of how their technology might be protected. They claim that that right was clear and absolute and they would have exercised it – simply because they could.

They wanted Saab off their desk and this was how they could do it. Pure and simple. It had nothing to do with shareholder value, but everything to do with convenience.

There are rights, and then there’s doing what’s right.

Personally speaking, I don’t think Spyker are going to be successful with their lawsuit. I hope they are, but I don’t think they will be. As a Saab fan and former employee, I’m just glad we’re getting a brief glimpse into the hive-mind of GM, a chance to see the lies from that time exposed for what they were – needless fear-mongering.

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22 Comments

    1. As I’ve said before, the Wallenbergs deserve their share of blame for that. I’d also throw in the UAW for creating the crises that drove GM into bankruptcy. Plenty of blame to go around.

  1. C’mon, Swade. I know that you have no love for GM. That’s plain.

    This is lawyer-speak. From a purely legal point-of-view, GM doesn’t have to get mired down in the reasoning behind their decision. They had the contractual right to nix the transfer whenever they chose. That is, they don’t have to justify the decision in any legal response; the clause was negotiated when GM bought Saab and again when they sold Saab. Thus, Spyker can’t legally fault them for exercising that option regardless of the reason. That’s the point — dismiss this lawsuit quickly.

    This statement says little about the reasoning or ass hattery of GM, and quite a bit about the capriciousness of this lawsuit.

    1. E’n’G: You do realize the YM-SWAN deal changed significantly between the summer of 2011 and the early weeks of December?

      The week before Dec 19th, there was no longer a transfer of ownership involved in the deal. That question was not to be raised again until Saab had finished developing a GM-free platform.

      1. Rune: I’m not fully understanding your point. GM owned the technology, and had the right to pull that at any time for any reason. Restructuring the deal with the Chinese didn’t abridge that right.

        1. “had the right to pull that at any time for any reason”

          …the very definition of a onerous contract. It would not make much sense for anyone to agree to such terms, and it flies in the face of everything GM said publically the year leading up to the Spyker deal.

          How would it have been possible for anyone to bid for Saab Automobile back in 2009 if GM at any given moment could have simply told the new owner “sorry, we are bored with this — best of luck to you!”? (of course… that actually explains a lot of what happened that summer)

          1. Well… If you happens to like Saab and have the money to buy it, then why not despite “onerous contract”? If it works out, then it works out. If it doesn’t work out, then it is all about who is left with the Old Maid. And it sure wasn’t to be Muller himself. So what risk did he take other, than his reputation in Sweden? Companies can officially say all sorts of stuff, but you can be sure there are lots of contracts in the business world that don’t make sense to the plebeians. Still, deals are made because money makes the world go round.

    2. Have you read the contract? I haven’t, but it has been claimed that GM only had the right to pull the license if there was a change in ownership exceeding 20%. Muller also claimed there were no “convenience” outs in the 9-4X contract. I guess we’ll see — at least if they get a fair trial that is.

    3. Eggs, you are, of course, absolutely correct in all likelihood. And no, I don’t have a soft spot for GM, as you know. In fact, you were the first person I thought of when I wrote this.

      As I wrote, though, there are rights and then there’s doing what’s right.

    4. Have to agree with Eggs here. Then again, as Swade says, there are rights and there is doing the right thing.

      However, I can imagine why GM simply wanted to get this over with. Throughout the last nine months of 2011, GM could have pulled the plug on Saab at any point, because Saab was in breach of countless of agreements with GM. Bills were not being paid, 9-4X production planning was in constant limbo etc etc. Apart from not being paid, this was also incredibly time-consuming for GM (I can imagine their legal and finance departments have put a lot of effort in this).

      My guess is that after a year of dealing with the Muller-led Saab and all its shenanigans, GM was looking at the new proposed deal under which Yougnman would buy the joint, thought ‘Not again a questionable and unreliable owner’ (because that is what Youngman looked like in December 2011) and decided to block it no matter what.

      Was it the right thing to do? Not for us Saabers, maybe not even from a moral point of view, but it probably was for GM itself and its stakeholders. And that is who they respond to.

  2. GM may have had the legal right to pull the rug out at any time, but that doesn’t mean they should have. If Saab’s development plans posed no threat to GM, why didn’t GM do the honorable thing and allow them to move forward? Better to put a great marque like Saab out of business and thousands of people out of work? I’ll never accept that as the right answer.

    1. And the “other ” whould have them bankrupt …….. sure you can bet on that . Salt in a open cut . Bottom line G.M. wanted SAAB closed , they got it . The Volt will get 125 miles per charge -up , it doesn’t . We can go on about it all , however I’ll be working in the garage on the next SAAB I wish to make correct and see a happy person drive away . At 60 years old I’ll just be happy with that . Personaly I never thought SAAB whould be gone as a manufacture , now I see it as my art and trade . Swade , your wife does lovely work . =)

  3. This just confirms what I thought. GM is not a car company anymore, it is a plague.
    It has killed Oldsmobile, Pontiac, Saturn, Hummer and now Saab. And it is affecting Opel/Vauxhall which are suffering, and now Pegeot/Citroën has caught the disease. I wonder if they will survive?

    Why is it so wrong with diversity?

  4. Whatever GM may admit to hardly matters as they’re sure to lie about it later. History shows it’s the GM way, after all! I’m just mad @ myself for supporting the bailout since, at the time, they owned Saab and I figured it was best for the industry in general…….Dumbass, I should have known better!

  5. I don’t think the Australian government, whether Labour or Liberal, will ever allow such an important industrial icon of Australia to go bust.

    If the Australian government could rescue the former State Bank of Victoria in the early 1990s (through a takeover by the then government owned Commonwealth Bank), they could do it again to bail out Holden, although I think it’s Qantas which needs a government bail out first.

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