Saab parent’s US$3b lawsuit vs GM thrown out by US judge
Reuters in Detroit
Dutch sports car maker Spyker’s US$3 billion (HK$23.3 billion) lawsuit accusing General Motors of trying to bankrupt Swedish automaker Saab was dismissed by a US federal judge on Monday who said the US automaker had the right to block the sale of a company using its technology.
Spyker sued GM in August last year, seeking damages and accusing the US automaker of trying to stop a deal with Zhejiang Youngman Lotus Automobile Co and eliminate a potential rival in the growing Chinese market.
“General Motors had a contractual right to approve or disapprove the proposed transaction,” US District Court Judge Gershwin Drain said in a hearing in Detroit. “The court is going to grant the motion to dismiss the matter.”
Drain said the deal Spyker had reached when it purchased Saab, giving GM the right to stop change of ownership, “is clear, unambiguous and absolute.” He added that GM’s statements voicing its opposition to Saab’s deal with Youngman were not made with malice or to intentionally harm Saab.
“We are pleased with the court’s decision to dismiss the case, which we believe was the appropriate result,” GM spokesman Dave Roman said in an email.
Spyker Chief Executive Victor Muller, who attended the hearing, declined to say whether he would appeal the decision. “We will be awaiting the written order and then we will assess,” he told Reuters.
Drain said he would file a more detailed explanation of his ruling later.
Last fall, GM rejected claims that it deliberately bankrupted the Swedish company by blocking a deal with Youngman. The US automaker has said the lawsuit was without merit and it had the legal right to approve Saab’s transaction.
Saab, one of Sweden’s best-known brands, stopped production in May 2011 when it could no longer pay suppliers and employees. It went bust in December 2011, less than two years after GM sold it to Spyker.
GM bought half of Saab - which had been making cars since 1947 and built a small, loyal following - in 1990 and the rest 10 years later. It decided to sell the brand in 2009 after the financial crisis and came close to closing it before Spyker bought Saab in January 2010.
Despite its well-known name, Saab was a niche player whose future had been questioned by analysts. Saab was profitable in only one of the 19 years it was owned by GM, executives with the Detroit automaker have said.
Youngman pulled out of a potential deal to buy Saab in late 2011 and the company then filed for bankruptcy.
A consortium called National Electric Vehicle Sweden AB (NEVS) last autumn closed a deal to buy most of Saab’s assets for an undisclosed sum. NEVS has said it aims to build its first electric car for the Chinese market based on Saab vehicle platforms at the start of next year.
GM’s attorney, Kathryn Kirmayer, said on Monday that Spyker bought Saab knowing GM had the right to veto any change of ownership. “GM would have said absolutely no way” to a rival like Ford Motor buying Saab, she said.
Kirmayer also called Spyker’s deal with Youngman, under which the Chinese company proposed to eventually take a 70 per cent stake in Saab, “sketchy in many respects.”
Spyker attorney Ben Chew, in asking the judge to reject GM’s request to dismiss the case, said Spyker and Youngman had reached the framework of a deal that would have allowed the assembly of Saab vehicles without the use of GM’s technology and vehicle platforms. The Chinese company also had agreed to lend Saab 200 million euros (HK$2.05 billion).
“That’s not some vague expectancy,” he said. “That’s money that would have kept the company rolling.”
Chew also said GM’s repeated rejections of a deal ultimately scared off Youngman. “They were a sniper shot to Saab’s heart.”