BMW To Buy Rolls-Royce for $570M
LONDON (AP) _ German automaker BMW has been given the nod to take over Rolls-Royce Motor Cars for $570 million, the owners of the prestigious British carmaker announced today.
BMW was selected over rival Volkswagen and a group of Rolls-Royce enthusiasts who are fighting to stop the flagship of elegant and expensive motoring falling into foreign hands.
The group, Rolls-Royce Acquisition Consortium, announced it would bid again, and another group of supporters said it also would enter the fray, but analysts gave them little chance of succeeding.
Vickers PLC, the corporate parent of Rolls-Royce, said it had reached an agreement in principle to sell the company to BMW for 340 million pounds, which is about $570 million.
The agreement is subject to approval by shareholders.
Vickers said it had gotten the best deal possible, although there had been speculation Rolls-Royce would fetch 400 million pounds ($660 million).
Vickers chairman and chief executive, Sir Colin Chandler, said he always considered the 400 million pound figure hyped, noting that some estimated the company would go for only 150 million pounds.
In Munich, BMW chairman Bernd Pischetsrieder said his company would stand by development plans it had pledged earlier if it won.
These involve injecting 1 billion pounds ($1.68 billion) into Rolls-Royce, and doubling the 2,600-strong workforce at Crewe, the headquarters in central England where the handmade Rolls-Royce and Bentley automobiles are produced.
BMW was one of four bidders to make it to the final stage of the auction. The others were Volkswagen, the Rolls-Royce Acquisition Consortium, and the British venture capital group Doughty Hanson.
Virtually all cars made in Britain come from companies controlled by foreigners, after Britain suffered a decades-long manufacturing decline at the hands of more efficient foreign competitors.
When the automaker Rover was sold to BMW in 1994, it was the last mass producer of British cars to go.
Chandler said the Rolls-Royce would continue to be built in Britain.
``BMW management recognize that the Britishness of both Rolls-Royce and Bentley is an important selling feature for them,″ he told the British Broadcasting Corp.
That’s not enough for Donald Longmore, secretary of the Rolls-Royce Acquisition Consortium, which includes a group of British shareholders in the company. He said his consortium would now raise its bid and top the BMW price to keep Rolls-Royce British-owned.
Another enthusiasts’ group, adopting the name Customer Buyout Team, also said it will bid.
``It is not over until the fat lady sings,″ Michael Shrimpton, spokesman for Customer Buyout, told Sky TV. ``In this case, the fat lady are the shareholders.″
He maintained shareholders will be disappointed at both the BMW price and the prospect of foreign ownership.
But Justin Urquhart-Stewart of Barclay Stockbrokers was one of the analysts giving the enthusiasts little chance.
``It is an emotional enthusiasm,″ Urquhart-Stewart said.
``I would be very surprised if institutional shareholders turn around and say, `For a little more cash, we will transfer our loyalty.′ ″