General Motors (NYSE: GM) to Sell Saab to Koenigsegg Automotive AB

General Motors Corporation (NYSE: GM) announced Tuesday that it will officially sell its Saab Automobile division to a consortium of companies led by tiny Swedish automaker Koenigsegg Automotive AB.

The negotiations began between the parties last week as Koesnigsegg began the frontrunner to purchase Saab. The three bidders reportedly in the lead to buy Saab were Koenigsegg; The Renco Group Inc., a private equity firm; and Merbanco Inc., a Wyoming-based group of investors.

GM said the sale would include an expected $600 million funding commitment from the European Investment Bank, guaranteed by the Swedish government. Additional funding for Saab's operations and investments would be provided by GM and the Koenigsegg Group AB consortium, it said.

According to Associated Press, GM will get nothing initially for Saab, but would be paid $150 million, the amount of capital Saab had left over from GM's ownership. This amount will come on top of the value of Saab's assets if the new company turns a profit.

General Motors bought a 50 percent stake in Saab for $600 million in 1990 and acquired the rest for $125 million in 2000.

The company leading the consortium, Koenigsegg Automotive, was founded in 1994 by Christian von Koenigsegg, a Swedish sports car fanatic and entrepreneur, who remains the chief executive. The company makes luxury sports cars at its headquarters, a former air force base near Angelholm, in southern Sweden.

Koenigsegg makes just a dozen cars a year, customized for every buyer. The company, which has a full-time staff of 45, doesn't advertise prices for its models, but they are believed to range between 8 million and 18 million kronor ($1 million-$2.3 million) each.

Saab, on the other hand, has more than 4,000 staff worldwide, is represented in some 50 countries, and typically produces more than 100,000 cars a year.

General Motors filed for bankruptcy protection June 1 and has said it plans to shed its Saturn, Hummer, Pontiac and Saab brands to focus on four core brands: Chevrolet, Cadillac, Buick and GMC.

Two weeks ago, GM said it found a buyer for Hummer in China's Sichuan Tengzhong Heavy Industrial Machinery Co., and it announced that Penske Automotive Group, Inc. (NYSE: PAG) would buy the Saturn brand.

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