BMW, which already owns Rover, is buying Rolls for pounds 340m - more than double the book value ascribed to it by its present owners, Vickers. The actual cost of the deal is likely to creep upwards as Vickers expects capital investment since January to be paid for by BMW.
The German car giant promised to double the 2,600-strong workforce at Crewe, invest more than pounds 350m and triple world-wide annual sales of Rolls and Bentleys to 6,000.
It is taking over a company whose models have been used by the rich and famous throughout the 20th century. Rolls-Royce said it was sad the company was moving out of British ownership but staff agreed that the BMW takeover was good news for the company's future.
BMW was already making engines for Rolls-Royce and was favourite to win the battle for the company once Vickers announced last autumn that it was up for sale.
Other contenders had included Volkswagen and two private consortia, including a group of Rolls-Royce owners. VW is still committed to establish a luxury car brand and is reportedly looking at resurrecting the premier "Horch" marque.
Mercedes will also be keeping a close eye on BMW's move. It is planning to launch a luxury limousine in competition with Rolls-Royce.
Vickers insisted it had got a good price for the company and had found Rolls-Royce "a good home". However, a group of enthusiasts who also bid for the company warned they would fight the proposed take-over.
The Rolls-Royce Acquisition Consortium said: "We bid more than pounds 300m. We will top it up to BMW's bid ... we will encourage shareholders to vote against the current bid."
BMW is unlikely to lose any sleep over that. Bernd Pischetsrieder, BMW's chairman, outlined his company's likely plans for Rolls-Royce at the Geneva Motor Show earlier this month.
This included pumping in pounds 1bn of investment in two new model lines over 10 years. Motor industry experts say the first of the new cars to emerge could be a baby Bentley based on the prototype "Java", showcased in 1994 and priced at pounds 100,000. A BMW 5 series chassis was used in the design of the Java.
As well as producing the new Silver Seraph, the Crewe workforce currently makes the two-door Bentley Continental, R and Azure models. World-wide, Rolls-Royce sales last year reached 1,918 - 10 per cent up on the 1996 figure.
Graham Morris, chief executive of Rolls-Royce Motor Cars, said: "We are delighted with the news and can now look forward to the future with even greater confidence."
He added: "We know BMW very well and enjoy an excellent working relationship with them. This outcome provides the most positive commitment to the future of Rolls-Royce and Bentley in Crewe and to the security of employment of our 2,600 loyal employees."
Steve Taylor, works convenor for the Amalgamated Engineering Union, which has 1,000 members at Crewe, said: "We needed long-term investment and it looks like we've got it. People have greeted the news well this morning and are brushing up on their German."
The sale of Rolls-Royce to a foreign enterprise follows a well established pattern. It follows Ford's acquisition of Aston Martin and Jaguar, BMW's purchase of Rover, and the purchase of Lotus by Proton of Malaysia. Only specialty car makers, such as sports-car maker TVR Engineering, remain in British hands.
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