BMW poised to take Rolls

SPECULATION mounted over the weekend that Rolls-Royce Motors is to fall into BMW's hands this week, spurred by a report in the German news magazine Focus on Saturday.

Vickers has been in talks with BMW and Volkswagen over the sale of its luxury car maker, with analysts pencilling in a selling price of pounds 300m- pounds 400m. Other bidders include the venture capital outfit Doughty Hanson and UK businessman Kevin Morley, a former director of Rover Group, although sources close to the talks have discounted their chances of success.

The German magazine cited BMW's existing relationship with the British company as helping its cause. BMW has a joint venture with the aero engine side of Rolls-Royce, which split from the car maker 25 years ago, and supplies Vickers with engines for the Silver Seraph, the latest model introduced by the Rolls-Royce car makers.

The decision by Sr Colin Chandler, Vickers' chairman, to put up the car maker for auction initially drew criticism from BMW, but may still prompt a higher offer from Volkswagen. The aero-engine group which still owns the Rolls-Royce name has an effective veto over any sale of the car maker, and is known to favour the BMW bid.

Daimler-Benz, the German industrial group and maker of Mercedes-Benz, has pulled out of the auction and is thinking of launching its own super- luxury brand.

"German car companies think they have to be active in the luxury or super- luxury segment. They have to break into this through Rolls-Royce or (its sister brand) Bentley before they will develop their own models," Sabine Bluemel at IMI Sigeco said last week.

"VW could try to outbid BMW and it could be that VW would be more attractive if it does ask Vickers to supply the engines. I personally think VW could do more with Rolls-Royce than BMW, but, from the point of view of Rolls- Royce, it might be nicer to be owned by BMW."