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September 9, 2009

CHINA: BAIC stake to fund Saab buy

State-run Beijing Automotive Industry Holdings - joint venture partner in Mercedes-Benz and Hyundai car assembly units in China - will take a minority stake in Koenigsegg as part of the Swedish luxury carmaker's purchase of Saab.

State-run Beijing Automotive Industry Holdings – joint venture partner in Mercedes-Benz and Hyundai car assembly units in China – will take a minority stake in Koenigsegg as part of the Swedish luxury carmaker’s purchase of Saab.

The agreement came soon after Geely Automotive said its parent wanted to buy Volvo Cars from Ford.

“This is an important step on the road toward a new Saab. We have a well prepared business plan, an important partnership and we are ready to proceed without state financing,” Koenigsegg chief executive Christian von Koenigsegg told Reuters.

Koenigsegg’s ability to finance the purchase has been in question.

BAIC, controlled by the Beijing government and number five car maker by unit sales so far this year, aims to more than double its annual volume to 2m million vehicles by the end of 2015 from 771,639 units in 2008.

It confirmed today its third Hyundai plant alone, adding another 300,000 units of capacity from 2011.

Saab, in contrast produced just over 93,000 units last year and Koenigsegg 18 hand built, top-end sportscars.

Koenigsegg declined to comment on how much capital would come from BAIC under the agreement, but said its plans for Saab required “in the region of” of SKR11bn ($1.56bn).

“We are now completely convinced that we will be able to complete the deal by the end of October,” Saab spokesman Eric Geers told Reuters. “This naturally also offers fantastic opportunities for Saab in the Chinese market.”

Still unanswered is the long-term future of Saab’s Swedish jobs under a Chinese owner.

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