Europe South Asia Asia Pacific Americas Middle East Africa BBC Homepage World Service Education



Front Page

World

UK

UK Politics

Business

Sci/Tech

Health

Education

Sport

Entertainment

Talking Point

In Depth

On Air

Archive
Feedback
Low Graphics
Help

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.


[ image: Rolls-Royce has become a world leader in aerospace engineering]
Rolls-Royce has become a world leader in aerospace engineering
Aerospace giant Rolls-Royce, well known for the prestige cars which it used to own and which still bear its name, said it believes the purchase will help its profits within a year.

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.


[ image: Rolls-Royce aims to be a world leader in a variety of fields]
Rolls-Royce aims to be a world leader in a variety of fields
Sir Ralph Robins, chairman of Rolls-Royce, said it wanted to strengthen its marine business with further acquisitions likely.

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.


[ image: Sir Colin Chandler: good deal for shareholders]
Sir Colin Chandler: good deal for shareholders
Sir Colin Chandler, chairman of Vickers said the deal represented "an excellent development for our shareholders, our employees and our businesses."

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.



Advanced options | Search tips




Back to top | BBC News Home | BBC Homepage | ©


The Company File Contents


Relevant Stories

04 Mar 99 | The Company File
Rolls-Royce profits smash records

30 Nov 98 | The Company File
Vickers propels itself forward

28 Jul 98 | The Company File
BMW on a Roller





Internet Links


Vickers

Rolls-Royce


The BBC is not responsible for the content of external internet sites.




In this section

Microsoft trial mediator welcomed

Vodafone takeover battle heats up

Christmas turkey strike vote

NatWest bid timetable frozen

France faces EU action over electricity

Pace enters US cable heartland

Mannesmann fights back

Storehouse splits up Mothercare and Bhs

The rapid rise of Vodafone

The hidden shopping bills

Europe's top net stock

Safeway faces cash demand probe

Mitchell intervenes to help shipyard

New factory creates 500 jobs

Drugs company announces 300 jobs

BT speeds internet access

ICL creates 1,000 UK jobs

National Power splits in two

NTT to slash workforce

Scoot links up with Vivendi

New freedom for Post Office

Insolvent firms to get breathing space

Airtours profits jump 12%

Freeserve shares surge

LVMH buys UK auction house

Rover - a car firm's troubles