Mayflower, which is a supplier of body panels to BMW's Rover subsidiary, scrapped its bid plans on Tuesday night after BMW warned that if control of Vickers' Rolls-Royce luxury car business changed it would cancel its contract to manufacture engines for the new Rolls model. BMW is one of the favourites to buy Rolls, which Vickers announced it intended to auction off two weeks ago
There was widespread surprise that Mayflower and its advisers BZW failed to get tacit approval from BMW before embarking on preparations for a pounds 1bn bid for Vickers.
Last night BMW denied, however, that this would hurt the two companies' relationship. "This commercial relationship is valued on its merits and will continue and develop depending entirely on the performance and conditions attaching to this commercial relationship."
Mayflower, meanwhile, vigorously denied that it had been forced to abandon a bid because of its inability to get the offer underwritten in the City. The Swiss bank UBS is said to have pulled out on Tuesday night as joint lead underwriter of a pounds 300m-pounds 400m rights issue that would have provided equity funding for the bid.
However, the Mayflower camp insisted that the finance was in place and it had the support of its shareholders. The only reason it abandoned the bid, which would probably have been tabled yesterday, was because of BMW's statement.
There were suggestions yesterday that Vickers might have stitched up a sweetheart deal with BMW to sell it the Rolls marque in return for forcing Mayflower to withdraw. Vickers, however, emphatically denied this.
Outlook, page 25