Saab Files for Liquidation: What Investors Need to Know
What's happening in the headlines can affect you as an investor. Here's what's going on, what you need to know, and what you should do.
The cold, hard facts
The New York Times is reporting that legendary Swedish auto manufacturer Saab Automobile has filed for liquidation. This occurred after the company's final hope for salvation by Chinese investors was dashed by its former owner, General Motors (NYS: GM) .
Saab has been teetering on the brink of destruction for years now. Its most recent hope for resurrection lay in the hands of Dutch entrepreneur Viktor Muller. Muller acquired Saab from GM in January 2010 for $74 million in cash and $326 million in preferred shares, but was unable to obtain the financing needed to modernize the brand's lineup given the world financial turmoil.
Most recently, Saab had been trying to arrange an infusion of cash from Chinese investors, but General Motors was able to quash the deal because it retains key Saab patents. GM feared the deal would negatively impact the company's existing relationships in China.
What you need to know
After many failed attempts at resurrection, this looks to finally be the end of Saab. Analysts expect the company, which began selling cars in 1949, to be broken up and sold piecemeal. In that vein, maybe GM can make some money by selling the patents. There's no word right now what the patents might be worth, but they were obviously important enough for GM to hang onto, even after it sold the company.
If the patents are worth a bundle, the market doesn't know it, as GM's stock is down about $1 today. Trading right now for a measly $19 per share and a P/E of 4, the stock needs all the help it can get. Keep an eye on this developing story by adding GM to My Watchlist, a free service of The Motley Fool that lets you easily keep up with everything on your investing radar. To add GM, simply click here now.
At the time this article was published Fool contributorJohn Grgurichloves the smell of newsprint in the morning, but he owns no shares of GM.Motley Fool newsletter serviceshave recommended buying shares of General Motors. Try any of our Foolish newsletter servicesfree for 30 days. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has a scintillatingdisclosure policy.
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