Lotus takeover means expansion

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The Independent Online

Business Editor

The Norfolk-based Lotus car group is to step up expansion and speed the introduction of its next model as a result of a £36m takeover by the Italian Benetton and Bonomi families.

Under the deal, confirmed yesterday, the families' jointly owned investment firm, 21 Invest, is to buy Lotus from Bugatti, the troubled Italian supercar builder that has owned the British company for only 18 months.

Andrea Bonomi, managing director of 21 Invest, said: "We are going to expand Lotus quite aggressively."

He said the extra funds would be available because the new owners would forgo dividends and leave all the cash generated within the company. There was no need for an injection of new capital to fund the expansion, which would raise the number of jobs at the company. It currently employs 985 people.

Last year Lotus returned to the black with a trading profit of £5.4m and retained profit of £2m on turnover of £50.8m.

As well as manufacturing a sports car range headed by the £47,995 Esprit S4, Lotus is a leading international automotive engineering consultant. Based on a 55-acre site at Hethel near Norwich, the company is also developing a small lightweight sports car due to go on sale in mid-1996.

Mr Bonomi said the takeover was not a result of an enthusiasm for cars: "I am not a car fan and neither is Alessandro [Benetton, president of the family company]. As far as we are concerned it could as well be making bricks. It is more exciting, higher profile, but for us it is a purely financial investment."

21 Invest was committed to long-term development in the UK venture capital market, he added.

The logic of the deal had nothing to do with Benetton's Formula 1 racing car company, based in the Cotswolds, or with TWR, the sports car engineer which Benetton owns with Tom Walkinshaw, Mr Bonomi said.

The Lotus name also continues to exist in Formula 1, but it belongs to the Pacific racing team and is not a part of the Lotus sports car group.

This is 21 Invest's second venture capital deal, following the completion in December of the management buyout of Johnson Radley, a Yorkshire mould- maker. A third deal is on the stocks.

Mr Bonomi said although 21 Invest would initially have 100 per cent of Lotus, it planned to organise a management buyout in which Lotus management would have "quite a high minority" stake.