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1994: MPs condemn sale of Rover

There have been angry clashes in the House of Commons over the sale of the last major British car manufacturer Rover.

A London stock-market statement yesterday confirmed German prestige car-maker BMW is buying the majority share - 80% - in Rover from British Aerospace (BAe) for 800 million.

Labour leader John Smith criticised the deal for only satisfying BAe's "short-term need for cash".


"The prospects for Rover in the future are excellent"

John Major, Prime Minister

Politicians on both sides are concerned the plan will leave the UK as the only Group of Seven nation without control of a leading car manufacturer.

Conservative Prime Minister John Major defended the proposal saying: "The prospects for Rover in the future are excellent. The new arrangements will provide new export markets and more investment."

The new Rover group, with a total of 100,000 employees, will produce more than a million cars a year worldwide and will be Europe's seventh largest car maker.

BMW has told the Board of Trade the 33,000 jobs at Rover's three UK plants - in Birmingham, Oxford and Swindon - will be safe, along with future models in development.

BMW made their secret bid to buy out BAe 10 days ago, at around the same time as BAe's long-term partner, Honda, put forward proposals to raise its stake in Rover to 47.5%.

The Japanese car giant has held a 20% share in the company for the last 14 years but has long been resistant to taking a majority share.

Rover chairman George Simpson flew to Tokyo as soon as the BAe board agreed - last Thursday - to accept BMW's offer.

British Industry Minister Tim Sainsbury said: "I would like to reassure any Japanese investors that as far as this country is concerned we will continue to welcome Japanese investment."

A statement from Honda said: "Now our partner has been acquired by a competitor we must start to reassess our entire operations in Europe."

In Context
Honda announced it was selling its 20% interest in Rover on 21 February.

This caused major problems in Rover's supply chain, since no BMW components were designed to fit Rover cars.

Rover's balance sheet was published a week later to reveal the company had 271 million more in assets than had been accounted for originally, sparking claims British tax-payers had been short-changed.

BMW sold Rover to the Phoenix Consortium headed by former Rover executive John Towers for 10 in May 2000 after millions of pounds of investment from BMW failed to turn the company into profit.

The new company became MG Rover but BMW retained production of the Mini and Land Rover was sold to Ford.

MG Rover was forced to call in the administrators in April 2005. A Chinese carmaker Nanjing Automotive bought the company, promising to re-start production in the West Midlands.


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