Mahindra may buy majority stake in SAAB owner NEVS

Mahindra & Mahindra is likely to have agreed to buy a majority stake in National Electric Vehicle Sweden (NEVS), an investment group which owns SAAB Automobile, after due diligence. NEVS is in the process of re-organising, which was expected to conclude by November 29th. However, the company has sought more time to complete the process. According to one NEVS administrator, there have been negotiations with "two major OEM manufacturers, both located in Asia" during the reorganisation period. Our sister publication Autocar Professional holds a copy of the statement. One is M&M, and China's Dongfeng might be the other OEM in negotiation with NEVS. The statement also says that one of the OEMs (likely to be M&M) has signed a letter of intent, also called a term sheet, on November 30.

The OEM will have an additional due diligence of NEVS this month, and later, will negotiate with SAAB AG for the trademark license. The OEM will lend bridge loans of 5 million Euros (approximately Rs 38.27 crore) to NEVS to cover the running costs of the company till the negotiations are finalised, which is expected to happen by February 2015 at the latest. These negotiations also include development cooperation through a joint venture. Additionally, 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'.

The successful completion of this deal would give M&M 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 refused to "comment on speculations".

NEVS, on the other hand, will receive the much-needed financial support to ensure its business continues to 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 (approximately Rs 945 crore) for the first phase of NEVS' business plan. Whether Mahindra & Mahindra will be a successful suitor or not, will be clear in about a month.