Saab sells for $140 million to Chinese firms

@CNNMoney October 28, 2011: 11:39 AM ET

NEW YORK (CNNMoney) -- Swedish Automotive has reached an agreement to sell its struggling Saab unit to two Chinese companies, in a bargain-basement deal to try to save a company that's nearly out of business.

Chinese distributor Pang Da Automobile Trade and auto manufacturer Zhejiang Youngman Lotus Automobile will pay just €100 million, or about $142 million, for the 62-year old automaker. Saab hasn't been able to manufacture a car at its Swedish plant since April due to financial woes.

If Saab's sale is completed by a Nov. 15 deadline, it would be the second time the company has been sold in two years.

General Motors (GM, Fortune 500) sold Saab to Swedish Automotive in early 2010 as part of its bankruptcy reorganization. Swedish Automotive is a Dutch company that was then known as Spyker, a high-end brand of hand-made sports cars. But Saab continued to struggle under the new ownership.

China has become the largest market in the world for auto sales, and Chinese automakers are scrambling to buy troubled global brands. Ford Motor (F, Fortune 500) sold its Swedish Volvo unit to Chinese automaker Geely in 2010 for $1.8 billion, which while considerably more than the Saab sales price is well below the $6.4 billion Ford paid for the company in 1999.

A different deal by a Chinese company to buy another GM brand, Hummer, fell through in 2010 and the unit was closed.

Saab announced a tentative deal with the two Chinese companies in June. But within weeks it said it had run out of the cash it needed to pay its workers.

Even after Saab arranged financing to resume paying salaries, problems it had making payments to suppliers essentially stopped it from resuming production. By early September it was forced to file for bankruptcy.

Saab still operates a network of U.S. dealers, but U.S. sales to have dropped to 4,612 year-to-date, with just 429 vehicles sold in September. As recently as 2003, it was selling more than ten times as many cars to U.S. buyers. To top of page

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