BMW apologises to Vickers over Rolls-Royce remarks

Click to follow
The Independent Online
THE CHAIRMAN of BMW, the German car maker, yesterday apologised to Vickers after reportedly describing the way it was handling the sale of its luxury cars business Rolls-Royce as a "game of poker".

Bernd Pieschetsrieder telephoned Sir Colin Chandler, the Vickers chairman, saying he had been very embarrassed by the reports but that his remarks had been distorted. Mr Pieschetsrieder was also reported to have criticised Vickers' decision to launch the new Rolls model, the Seraph, before the sale was completed.

BMW is one of four companies expected to put in a bid for the Crewe-based luxury car maker by the end of this month. Volkswagen, Toyota and Ford are also thought to be interested in bidding. Daimler-Benz may throw its hat in the ring, even though it was reported yesterday to have pulled out.

Vickers is not planning to entertain a bid from a group of Rolls-Royce owners led by Kevin Morley, the former marketing and sales director of Rover. The group had not been sent the memorandum of sale by Vickers' advisers Lazards since it had not demonstrated its financial credibility, said Sir Colin.

The sale is expected to raise pounds 350m-pounds 400m, although estimates for the value of Rolls range from as low as pounds 200m to as much as pounds 600m. Sir Colin said that it would take until the middle of the year, however, for the sale to be completed.

Sir Colin also confirmed that Vickers had pulled out of talks to take over GKN's armoured vehicles division. The plan would have been to merge it with Vickers' Challenger tank division but Sir Colin said the two sides could not agree on price.

GKN is thought to have beaten a consortium led by Vickers to a multi- billion pound contract to develop a new multi-role armoured vehicle for the British, French and German armies. Based on this, GKN has put what Vickers regards as an excessive valuation on the business.

Sir Colin said it appeared to be the German government which was anxious to proceed with the new vehicle quickly and had selected the GKN-led Eurokonsortium ahead of the Vickers consortium. But he questioned whether the design selected was the best value for money and urged the UK government not to be "bounced" into a decision which was against its best interests.

He was speaking as Vickers reported a 9 per cent decline in operating profits last year to pounds 75.8m. The figures exclude pounds 57m of exceptionals, mainly goodwill write-offs relating to the disposal of its medical division. Vickers also spent pounds 2.4m defending itself against the abortive bid from the automotive group Mayflower.

Although Rolls-Royce car sales rose 10 per cent, profits from the automotive division dipped from pounds 37.6m to pounds 30.5m as margins were squeezed by the need to sell older models in advance of the launch of the Seraph.

Vickers has enough order to keep its tank factories in Leeds and Newcastle busy for the next two years and Sir Colin said it was hopeful of sealing a pounds 350m order for Challenger 2 tanks from Qatar in the next three months.