Monday, September 20, 1999 Published at 18:49 GMT 19:49 UK
Business: The Company File
Rolls-Royce to buy Vickers
Vickers and Rolls-Royce both helped develop the RAF's Spitfire
Two of the UK's best known industrial names are to merge after a £576m ($933m) takeover bid from Rolls-Royce was accepted by engineering group Vickers.
The link-up between the companies, who six decades ago joined forces to create the Spitfire aircraft, is designed to create a global leader in marine power systems.
Vickers is also one of the best-known and oldest engineering companies in the UK.
Its historic products range from Dreadnoughts, submarines and tanks to the Vickers Vimy in which Alcock and Brown made the first non-stop transatlantic flight in 1919.
BMW and Volkswagen
Founded in 1828, Vickers diversified into activities as wide as tractors, office furniture, medical equipment, printing machinery and underwater exploration.
Its range of businesses took a new twist after its steel, shipbuilding and aircraft businesses were nationalised in the 1960s and 70s.
Among its purchases in the 1980s was Rolls-Royce Motor Cars, which it bought after it was privatised by the government.
However the prestige car maker was controversially sold to Volkswagen last year, in a complex series of deals which left rival BMW with the rights to use the Rolls-Royce name on cars after 2003. Volkswagen retains the rights to the Bentley name.
Tanks and military equipment
Rolls-Royce already makes turbines and diesel and electrical motors for the marine industry and includes 30 Navies among its customers.
Vickers' marine division, Vickers Ulstein Marine Systems, makes ship propulsion systems, engines and deck machinery for fishing vessels and rigs.
It also offers marine engineering services including ship design.
Vickers owns a turbines division and a defence systems operation providing high technology systems for tanks and other specialist military equipment.
He said the company wanted to become the number one or number two operator in all of its markets.
The acquisition of Vickers probably put the company in the number one position in marine systems, while it was already a leader in aerospace propulsion, he said.
Sir Ralph added that the company would seek to sell the defence systems division, which makes the Challenger battle tank and will represent about 6% of the enlarged group.
Sir Ralph said that no large-scale redundancies were likely as a result of the deal, although some head office and administrative positions could go as the two head offices are merged.
The company said the offer was consistent with the strategies Rolls-Royce is pursuing to establish leading positions in the aerospace, marine and energy markets.
Under the offer Vickers Shareholders will receive 252.85p per share, 53% above the share price on 17 September.
The takeover is subject to approval of both sets of shareholders.
Some analysts were sceptical about the deal which, they said, represented extremely good value for Vickers, but failed to address Rolls-Royce's prime concern of how to boost its struggling aero-engines business.
At 1100 (1000 GMT) Vickers shares were up almost 50% to 245p from 165.5p. Rolls-Royce in contrast was down 5p to 221p.
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