BBC NEWS Americas Africa Europe Middle East South Asia Asia Pacific

BBC News World Edition
 You are in: Business  
News Front Page
Middle East
South Asia
Market Data
Talking Point
Country Profiles
In Depth
BBC Sport
BBC Weather
Friday, 17 March, 2000, 07:55 GMT
BMW splits up Rover
German car maker BMW is to split up its Rover subsidiary and sell the Rover Cars business to UK venture capital firm Alchemy Partners.
Rover sell-off
BMW keeps Cowley plant, builds new Mini
Alchemy buys Longbridge, will build Rover 25, 45, 75, old Mini
Rover rebranded as MG
Land Rover will be sold to well-established car maker
In fact, BMW will pay Alchemy to take Rover of its hands, although the exact sum has not been disclosed yet and is probably still subject to negotiations.

BMW will keep the Cowley plant near Oxford, where it will build the new Mini.

The American Ford Motor company is expected to announce later today that it'll take over the Land Rover division.

The BBC America Business correspondent says sources close to Ford have revealed that the deal to buy Land Rover is worth $2.9bn (1.8bn) and will be announced in the German city of Munich.

The sell-off decision has been met with anger by trade unions and the UK government.
Rover workers discuss the news outside Rover's Longbridge plant
Rover workers feel let down by BMW
UK Trade and Industry Secretary Stephen Byers said BMW's announcement was "a great disappointment".

"It creates uncertainty for workers at Rover, their suppliers and their families", he said.

Union leaders accused the German car maker of "betrayal".

Longbridge survives

Alchemy Partners will set up a new firm, the MG Car Company, which will continue with Rover's current model range of the 25, 45, 75 and "old Mini" and will provide service to Rover's customers.

Alchemy says MG Cars will keep Rover's Longbridge plant open, and will employ "a significant workforce".

"The work force will be in rewarding and enjoyable jobs with some security. Not all of them will be in that position but a good number will be," said Alchemy boss Jon Moulton.
Alchemy Partners
Founded in 1997
Managing partner: Jon Moulton
1998 investment totalled 234m
Took over jeweller Goldsmiths
Bought Fads DIY store from Boots
"We will not be trying to be a mass market producer, a very large volume producer. We will be a medium volume producer with a niche market strategy," he said.

"We are are going to reduce the cost base to a level where the company generates cash rather than eats it."

The investment group is said to have funds of about 1bn and three of its top executives have a background in the motor industry, including Kevin Morley, a former Rover marketing director.

Alchemy has previously taken over a DIY chain FADS from Boots. It has also helped a number of UK companies to delist from the stock market and become private again, including the Goldsmith jewellery chain.

Another success is turning around Parker Pens, which was rescued after making massive losses.

Losses escalate

Rover Figures 1999 - 1998
Rover 1999:
Sales: 143,343 cars
Market share: 6.52%
Losses: 1.207bn euros (+26.1%)
Rover 1998:
Sales: 193,919 cars
Market share: 8.63%
Losses: 957m euros
The prime minister's official spokesman, Alistair Campbell, said there had been "a difficulty in getting clear and reliable information from BMW".

He said the first the government had heard of the Alchemy bid was via the media and, crucially, that the proposed aid to help reconstruct the ailing car plants would not be automatically transferred to any new owners.

BMW's decision was prompted by continuing losses at Rover, to more than 750m last year, despite a rescue package agreed with the UK Government, said UK Trade Secretary Stephen Byers.

Land Rover to be sold?

BMW will keep its newly modernised Cowley plant near Oxford.
Union delegation
Union delegates absorb the news
Investment for production of the new Mini at Longbridge is being stopped and the model will instead be produced at Cowley, ready for launch in early summer 2001.

Workers at the Land Rover and Range Rover plant in Solihull now face an uncertain future too.

The plant is seen as the "jewel in the Rover crown" and had not expected to be sold off.

Mr Byers and trade union representatives said they had been told by BMW that a purchaser for Land Rover had been lined up, who was a "main player in the car industry".

The 10,000 workers at the plant produced 170,000 vehicles last year - a joint record.

Pulling out of Rover is not cheap. BMW will take a 3.2bn euro ($3.10bn) charge in its 1999 accounts to cover the cost. There has been speculation that BMW will actually pay Alchemy to take Rover off its hands, but this has not been confirmed yet.

The Rover sell-off also triggered a management shake-up at BMW. Carl-Peter Forster, Henrich Heitmann und Wolfgang Ziebart, in charge of sales, development and production respectively were forced to resign after they had pushed for holding on to Rover.

Alex Batchelor, Interbrand
"No one wants them. You can't give Rovers away."
Jon Moulton, Alchemy
"We intend to end up with a highly viable motor business"
Stephen Byers, Trade & Industry Secretary
"I'm worried about the levels of redundancy"
The BBC's Jonathan Charles
"Decision taken in Munich"
The BBC's Simon Montague
"Its not owned a car maker before and admits it's a gamble"
The BBC's Stephen Evans
"BMW is now prey to bigger companies"
See also:

16 Mar 00 | Business
16 Mar 00 | Business
16 Mar 00 | Business
16 Mar 00 | UK Politics
16 Mar 00 | Business
16 Mar 00 | Business
16 Mar 00 | Business
16 Mar 00 | Business
15 Mar 00 | Business
Internet links:

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

Links to more Business stories are at the foot of the page.

E-mail this story to a friend

Links to more Business stories

© BBC ^^ Back to top

News Front Page | Africa | Americas | Asia-Pacific | Europe | Middle East |
South Asia | UK | Business | Entertainment | Science/Nature |
Technology | Health | Talking Point | Country Profiles | In Depth |