BBC Homepage World Service Education
BBC Homepagelow graphics version | feedback | help
BBC News Online
 You are in: Business
Front Page 
UK Politics 
Market Data 
Your Money 
Business Basics 
Talking Point 
In Depth 

Thursday, 17 August, 2000, 06:22 GMT 07:22 UK
Alchemy boss: Rover to struggle
Rover workers were pushing for the Phoenix bid
Rover workers did not want Alchemy to succeed
The head of the venture capital group Alchemy Partners has launched a scathing attack on the deal which saw Rover cars bought from BMW for 10 by a UK government supported consortium.

Jon Moulton's company stunned the industry and UK politicians when it announced in March that it had agreed to buy loss-making Rover cars from Germany's BMW.

Jon Moulton, managing partner at Alchemy Partners
Jon Moulton: Rover faces battle
Its plans were to end Rover's days as a mass market car maker, instead focusing on smaller volumes of MG-badged vehicles.

The proposals for an end to volume car producing and the threat to half the 10,000 Longbridge jobs, led to a union and political campaign to persuade BMW to consider a rival offer, from the Phoenix consortium.

Alchemy eventually dropped out, leaving the way for clear for Phoenix to buy the car firm for a token 10.

In a speech to the Marketing Society widely reported in UK newspapers on Thursday morning, Mr Moulton said the Government's "chaotic" role in backing the Phoenix consortium during the Rover crisis helped BMW save 1bn.

Eleventh hour

"The Government made it easy for BMW to get out of Rover at a relatively low cost," he said.

Speaking for the first time publicly about the deal, Mr Moulton said the last minute collapse had come about because of BMW's lawyers advised the German company at the eleventh hour that it was not obliged to ensure Rover remained solvent for two years.

John Towers, head of the Phoenix consortium
John Towers, from Phoenix, is confident
This made Alchemy's proposals to turn the Longbridge factory into a mid-volume sports car company and cut up to 4,000 jobs less attractive to BMW than selling to the Phoenix consortium.

Mr Moulton was reported to have said: "Once BMW realised it didn't have that legal exposure, its objective was to get rid of Rover at the lowest cost."

He added that it was "a reasonable possibility" that the new Rover company, under Phoenix ownership, would close.

The Financial Times newspaper quoted Mr Moulton as saying "what has been done gives Rover very little chance of being viable".

Rover confident

It said he predicted would be once again fighting for its existence, by March at the latest.

Our position at the time was to safeguard jobs. It was a commercial decision by BMW

DTi spokesman
The Daily Telegraph reported him as saying: "I would suggest it will be a political disaster if it goes under. We have a sweepstake in the office as to how long it will last."

Rover's Longbridge plant was "the least efficient in western Europe" and needed to produce five times more cars than its full capacity to break even, the paper quoted Mr Moulton as saying.

It added that a spokesman for Mr Byers said: "Our position at the time was to safeguard jobs. It was a commercial decision by BMW."

The new owners of Rover cars believe that they will succeed in turning the firm back to profit as a mass market car maker.

It has 500m of working capital from BMW and has enough other finance available to help it expand and become profitable before finding a partner among the world's largest car firms.

Search BBC News Online

Advanced search options
Launch console
See also:

28 Apr 00 | Business
Alchemy shies away from Rover risk
01 May 00 | Business
Blair's pledge to Rover workers
30 Apr 00 | Business
Phoenix 'needs government cash'
28 Apr 00 | Business
BMW threat to close Rover
28 Apr 00 | Business
Can Phoenix turn Rover around?
28 Apr 00 | Business
Alchemy bid timetable
02 May 00 | UK
In the shadow of Longbridge
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