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
On Air
Feedback
Low Graphics
Help

Thursday, May 7, 1998 Published at 17:21 GMT 18:21 UK


oldBusiness

VW beats BMW in race to buy Rolls-Royce

VW says it plans to use British-built engines to power future Rolls-Royce cars


BBC business correspondent Greg Wood says deal is a surprise (1'19")
Volkswagen looks set to snatch control of luxury car maker Rolls-Royce from the clutches of its rival BMW after an about-turn by parent company Vickers.

Just eight days after Vickers said it had reached a deal to sell the British car company to BMW it stunned the City by announcing a new deal with VW.

The BMW deal is worth £340m, but VW looks to have trumped its rival with a £430m offer.

In a statement after the stock market closed, Vickers said it had now reached an agreement to sell Crewe-based Rolls-Royce Motors to VW.


[ image: VW raised BMW's bid by £90m]
VW raised BMW's bid by £90m
It said BMW had the right to terminate its agreement in the wake of the new offer, worth an additional £90m.

And it added that the directors of Vickers would now recommend that shareholders reject the sale of Rolls-Royce to BMW, and instead recommend the new Volkswagen offer.

The Volkswagen offer deals a massive blow to BMW's ambitions of increasing its hold on the British motor industry.

It already owns Rover and supplies German-made engines for Rolls-Royce, but VW plans to use British-made engines.

Final decision on June 4

Another Vickers' subsidiary, Cosworth, already supplies engines to Rolls-Royce. Vickers said it and VW would review the relationship between the engine supplier and the car plant.


[ image: Shareholders were angry that one of Britain's best-known products is being sold to a German firm]
Shareholders were angry that one of Britain's best-known products is being sold to a German firm
Vickers' chairman Sir Colin Chandler said: "Throughout the Rolls-Royce Motor Car sales process, we have focused on achieving the maximum value for our shareholders and this remains the case."

The final decision on Rolls-Royce's future will lie with Vickers' shareholders who will vote on the alternative offers at special meetings on June 4.

If the new deal goes ahead, investors will land a windfall of £273m, worth 80p a share, against a £188m payout, worth 55p a share, under the terms of the BMW offer.

Laid back

Roger Lyons, general secretary of the MSF union, which has so far welcomed the BMW deal, said: "We were very laid back about the BMW bid because we have a very positive relationship with them as far as Rover is concerned.

"The unions will now have to look very hard at the small print to check to see if the same assurances that were given by BMW have been given by Volkswagen."

At its annual meeting last week, Vickers came under attack from shareholder on two fronts, firstly for planning to sell one of Britain's best known products to a foreign buyer and secondly for not holding out for a higher offer from another bidder.

News of the higher offer will be welcomed in the City, and now attention will focus on the response from BMW and whether it walks away from Rolls or comes back with a higher offer.

The sale of the company, which makes Rolls-Royce and Bentley models, will allow Vickers to concentrate on its other businesses such as the manufacture of the Challenger 2 tank and propeller systems for ships.





Advanced options | Search tips




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


oldBusiness Contents

Commodities
Exchange Rates
Relevant Stories

26 Apr 98 | oldBusiness
VW trying again for Rolls-Royce

31 Mar 98 | oldBusiness
BMW pledges £1bn Rolls-Royce investment

29 Apr 98 | oldBusiness
BMW wins race to buy Rolls-Royce

05 May 98 | oldBusiness
VW revs up for Lamborghini bid

01 Jun 98 | oldBusiness
VW back in race for Rolls-Royce





Internet Links

Official Rolls-Royce and Bentley cars Website

Volkswagen

BMW

Vickers - Rolls-Royce and Bentley


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




In this section

Kosovo plane crash leaves 24 dead

From Sport
Schedule and results

From UK Politics
Pre-Budget business boost

Coup in Pakistan: Special report

Party guide: Malaysia's opposition alliance

Analysis: A fearsome force

Sri Lanka: The ethnic divide