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Hopes flicker for Saab future

2010-01-26 06:47

Amsterdam/Stockholm - Hopes tiny Dutch car maker Spyker can yet rescue Sweden's failing Saab automobile brand and the 3 400 jobs that depend on it flickered back into life on Monday.

Shares in the niche producer, whose original bid to buy Saab was backed by a Russian banker and an Abu Dhabi developer, soared by 80% to approach a market value of 100 million euros ($140 million).

Saab's expected $400 million net loss for 2009 alone eclipses that. Nevertheless, behind the sharp gains were investor hopes that revived talks between Spyker and Saab's ailing U.S. parent General Motors had made progress over the weekend.

Hopes for a deal announcement were raised when GM scheduled a news conference for Monday. That later turned out to be mainly about naming acting chief executive Ed Whitacre as permanent CEO.

Whitacre did however confirm that GM has been in advanced talks with Spyker.

Spyker shares jumped in Amsterdam trading, rising as much as 80% to 3.884 euros, later closing at 3.800 euros.

"Talks must end soon"

A Spyker/Saab deal was first mooted at the beginning of December. But on Dec. 24, with no deal in sight, GM said it was proceeding with its plans to wind down the Swedish business.

Spyker with about 110 employees and Saab with 3 400 make an unlikely pairing. One thing they do have in common is that neither made a profit in the past decade.

But the Dutch minnow still holds out hope for a deal.

"Spyker confirms that talks are ongoing, the outcome of which is still uncertain. As Saab is currently in liquidation talks must end soon," Spyker said in a statement.

A Swedish Television programme had earlier reported, without citing sources, that Spyker was set to announce the purchase of Saab at a Monday's press conference, and that Sweden has agreed to guarantee loans for the deal from the European Investment Bank.

A Swedish government spokesman later said no decision had been taken on any loans guarantee.

Clinching control of Saab would be the easiest part of the deal, as questions still remain over whether it would work.

"I don't really know what Spyker brings to Saab in terms of expertise, in terms of ability to turn the business around. Equally, on the Saab front, I don't really know how a business that's selling as few units as it sells can ultimately be profitable," said Nomura analyst Michael Tyndall.

"I think it's incredibly difficult to be successful in the segment they're trying to be successful in without a big budget. We're talking about a quasi-premium brand building cars in one the more expensive locations in terms of labour costs. There are many many challenges ahead."

Clothing executive

Spyker's Chief Executive Victor Muller is a former clothing brand executive who has so far managed to squeeze out of tight spots and keep the business that once built a coach for the Dutch royal family as a going concern.

While Saab has built a reputation as a quintessentially Swedish car with its 9-3 and 9-5 models - solid, not too flashy - Spyker is all about flash, from its hand-crafted leather interiors to head-turning brushed-metal styling, backed by the roar of a tuned Audi V8 engine that can push its C8 Aileron and C8 Spyder models to 300 km/h.

Lars Carlstrom, a spokesman for rival bidder Genii Capital, was sceptical about any Saab/Spyker deal reaching fruition.

"As long as they have not signed there is a chance (of the sale not happening) yet it's most likely we will see an outcome of this today," Carlstrom said.

Two wind-down supervisors took control of Saab earlier this month, but GM said it was continuing to evaluate offers during the wind-down process after Spyker and other parties submitted updated bids for the loss-making brand.

Spyker has been in negotiations with GM over the weekend in Stockholm. Carlstrom said Spyker was no longer relying on financing from banking tycoon Vladimir Antonov, who holds 29.9% of Spyker.

"Antonov will be taken out of the deal through a requirement from the U.S. government," he said. Abu Dhabi's Mubadala Development Company owns a further 23% of Spyker.

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