M&A

25 November, 2009

UPDATE 1-Swedish govt says GM still hopes for Saab sale

* GM appears to have not given up on Saab sale-official

* Minister says Saab sale getting more difficult day by day

(Adds detail, quotes, background)

STOCKHOLM, Nov 25 (Reuters) - General Motors [GM.UL] appears to still hope to sell its Swedish Saab Automobile unit despite a deal collapsing, a Swedish government official said on Wednesday.

"I talked to GM last night and my impression is that they have not given up hope," Joran Hagglund, state secretary at Sweden's Industry Ministry, told reporters.

Sweden on Tuesday effectively ruled out a state bailout of GM's loss-making Saab unit after tiny luxury car firm Koenigsegg pulled out of a bid for one of the Nordic country's best-known automobile brands. [ID:nGEE5AN2PR]

But finding a new buyer would be a race against time, Swedish Enterprise Minister Maud Olofsson acknowledged.

"For every day that passes the challenge gets bigger and bigger," she told reporters.

Sweden's centre-right government has been adamant over the past year that a state takeover of Saab was not on the cards, saying state ownership was unlikely to help reverse decades of losses at the GM-owned carmaker.

But with less than a year to go before general elections, which opinion polls show the governing coalition would lose by slim margin, leaving Saab to its fate entails political risks.

"The passive stance of the government has contributed to making a constructive solution for Saab more difficult," Tomas Eneroth, MP and spokesman for the opposition Social Democrats on industry issues, said in a statement.

"Maud Olofsson must answer to why she has not acted in as constructive a manner as have other European countries with large auto industries."

The government has put in place measures aimed at supporting the Nordic country's hard-hit carmakers, mainly 20 billion crowns in credit guarantees, but left the responsibility for finding a new home for Saab with its U.S. parent.

"This is in GM's hands. They must decide whether they can sell Saab and if so to whom," Olofsson said on Wednesday.

(Reporting by Johan Sennero; Writing by Niklas Pollard; Editing by Erica Billingham)

((niklas.pollard@reuters.com; +46 8 700 1110, Reuters messaging: niklas.pollard.reuters.com@reuters.net))

Source: http://www.reuters.com