Mahindra likely to buy majority stake in SAAB owner NEVS

Mahindra & Mahindra may become majority stake owner of Swedish carmaker SAAB. The Indian company is learnt to have agreed to buy a majority stake in National Electric Vehicle Sweden (NEVS), an investment group which owns SAAB Automobile, subject to a positive decision post due diligence.

NEVS is currently undergoing a re-organisation process that was expected to be completed by November 29. The company has requested the authorities for permission to extend the re-organisation time. 

According to NEVS' administrator, negotiations have continued with ‘two major OEM manufacturers, both located in Asia’ during the reorganisation period. A copy of the statement is with Autocar Professional. China's Dongfeng is rumored to be the other OEM in negotiation with NEVS. The statement also mentions that one of the OEMs (expected to be Mahindra & Mahindra) has signed a letter of intent, also called a term sheet, on November 30.

Under the conditions of the term sheet, the OEM will commence an additional due diligence of NEVS this month and will negotiate with SAAB AG regarding the trademark license. The OEM will provide bridge loans of 5 million Euros (Rs 38.27 crore) to NEVS to cover the running costs of the company until the conclusion of the negotiations, which is expected 'latest' by February 2015.

The negotiations also include development cooperation through a joint venture.

NEVS' industrial service could also be part of the deal. It is learnt that the OEM is also 'positive to a scenario where NEVS Industrial Service is a complement to the business plan regarding in-house car manufacturing'.

A successful deal would give Mahindra & Mahindra access to advanced technologies and possibly the trademark license of SAAB. It would also help the Indian company's global plans.When contacted, a Mahindra spokesperson said that "the company will not comment on speculations".

For NEVS, it will provide that much-needed financial support to continue its business and grow internationally. The SAAB Phoenix platform will be the first project to benefit from the investment. NEVS' financial problems started when its shareholder Qingbo Investment failed to complete a promised financial commitment of 1,150,000,000 Swedish Kroner (Rs 945 crore) for the first phase of NEVS' business plan. It will be clear in a month or so if Mahindra & Mahindra becomes the successful suitor.