Penske-Saturn deal turns into a train wreck

Posted Oct 1st 2009 9:10AM by Tom Taulli

While M&A is making a comeback, deal-making can still be tough. Just look at General Motors. By all accounts, it looked like its proposed deal to sell Saturn to Penske Automotive Group (NYSE: PAG) was all but done.

Not so. Yesterday, Penske backed out. The reason: the company thought it would not be able to supply cars after 2011 (when GM would stop production). As a result, Saturn plans to shutdown operations.

Founded 24 years ago, Saturn was supposed to be a key in GM's strategy for success. But building a new brand is far from easy -- or cheap.

For the U.S. government, the busted deal is certainly a big disappointment. It means less cash to pay off US taxpayers. At the same time, the demise of Saturn will impact the 350 dealers across the country as well as 13,000 employees.

Yet, sometimes deals come to life again, right?. True, but it looks like the Saturn deal involved lots of hours of work -- and it was widely reported in the media. If there was an interested party who wanted to produce the cars, it seems like that would have happened already. So, it looks like this could really be the end of Saturn.

Tom Taulli is the author of various books, including The Complete M&A Handbook.

Tags: featured, General Motors, GeneralMotors, inthenews, Penske, Saturn

Print this

Reader Comments (Page 1 of 1)

10-01-2009 @ 11:47AM

mapoftazifosho said...

Saturn was a mistake to begin with. From a branding perspective, GM should have simply made these vehicles under their existing nameplates and changed marketing strategy. It would have been cheaper, and better in the long run.

GM also neglected Saturn after the initial batch of unique product that was exclusive to the Saturn brand upon start up. Around 2000, GM gave the brand garbage product that the consumer rejected.

So much blame to go around...at the end of the day, Penske did the right thing for his business.

10-11-2009 @ 3:04AM

Twitch said...

Personally I think Saturn was a very good brand. I got into a car accident while driving a 2001 Saturn. Completely totaled the car, but it saved my life and I walked away with very minor injuries. After that I bought another Saturn that was a very reliable car. Even after it had 130,000 miles on it, it still ran well and was perfect for coming home from college and stuff. I'm very sad to say goodbye to the Saturn brand. They were by far some of my favorite cars.