Spyker Cars, Saab Automobile, Pang Da Automobile and Zhejiang Youngman Lotus Automobile (Youngman) have signed a non-binding memorandum of understanding (MoU) for the manufacture and distribution of cars in China. The MoU includes an equity participation in the total aggregate amount of about EUR 245m. Under the terms of the agreement, both Saabs and a to-be-announced new brand of vehicles will be built at a yet to be disclosed location.
The latest announcement follows the 16 May deal whereby Spyker and Saab Automobile agreed to establish a strategic alliance with Pang Da, China’s largest publicly traded automobile distributor. Under the terms of that MoU, both a 50/50 distribution joint venture (DJV) and a manufacturing joint venture (MJV) for Saab vehicles as well as for an MJV owned brand (the so-called ‘child brand’) in China were agreed.
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As part of the latest deal, Youngman and Saab will each have 45% of the shares in the MJV, with Pang Da to take the remainder. As for the DJV, Pang Da will hold 34%, with 33% each for Youngman and Saab.
According to the terms of the 16 May MoU, Pang Da was to take an equity stake in Spyker for a total amount of EUR 65m, representing 24% of Spyker on a fully diluted basis. That stake will remain at 24%, with Pang Da’s investment valued at EUR 109m. The share price stays at EUR 4.19 per share. Pang Da will have the right to nominate up to two members of the Supervisory Board of Spyker.
Youngman now becomes an additional shareholder in Spyker, taking a 29.9% tranche on a fully diluted basis and investing EUR 136m at EUR 4.19 per share. Youngman will have the right to nominate up to two members of the Supervisory Board of Spyker.
Saab Automobile and Youngman will each have a 45% interest in the proposed manufacturing venture, with Pang Da to hold the remaining 10%. As regards the distribution JV, Pang Da will hold the majority 34%, with Saab and Youngman each having 33%.
The MOU is non-binding and the transactions following the MOU are subject to agreement on definitive transaction documents and certain conditions, which include consents from certain governmental agencies and third parties.
Victor Muller, CEO of Spyker and Saab Automobile said: “Having entered the MOU on May 16 with Pang Da, we collectively immediately set out to identify the most suitable (manufacturing) partner to join Saab and our joint ventures. We are convinced that Youngman represents all the qualities required to make Saab and the joint ventures a success. This MOU not only shows the belief of Pang Da and Youngman in our products for the Chinese market, it also is a step that significantly strengthens Saab’s financial position and would secure the mid and long term financing of Saab Automobile.”
Pang Qingnian, the chief executive of Youngman added: “We have been in contact with Saab Automobile for quite some time and we are very pleased to have reached an agreement with both Pang Da and Saab. Youngman is an automobile industrial group that produces and sells Youngman cars, MAN heavy trucks and automobile spare parts. We look forward to a long lasting and successful relationship with Saab Automobile and Pang Da both in China as well as globally through our investment in Saab.”
No announcement was made concerning how the new deal might affect Youngman’s existing manufacturing alliance with Proton and Lotus. The Youngman Lotus L5 is the latest product of that JV. This Golf-sized car went on sale in China only last month. Unlike the smaller L3 model, the L5 is made at Youngman’s Hangzhou plant in Zhejiang province. A minivan and an SUV are reportedly under development, each of which should share the platform of the L5 as well as Proton’s 1.6-litre I4 Campro gasoline engine. It is believed that the L5’s architecture is based upon that of the Mitsubishi Lancer.
