BMW will sell Rover to Alchemy within days

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The Independent Online

German car giant BMW last night hoped to sell Rover to a controversial venture capital company "within days" after declaring that a rival consortium had no financial backing.

Senior managers at the motor manufacturer said that the Phoenix consortium, led by the former Rover executive John Towers, had again failed to provide the necessary guarantees.

The Phoenix proposals did "not constitute a basis for entering negotiations" and BMW now wanted to complete discussions with the Alchemy Partners "as soon as possible". The agreement could be signed early next week.

Aware of the likelihood of the sale, the Amalgamated Engineering and Electrical Union threatened BMW with legal action over alleged breach of contract.

The union believes that Alchemy will fail to honour severance and pension agreements. Lawyers have advised the union that the German company could be held culpable if it sells Rover to the venture capitalists.

BMW made clear its views on the sale as a union delegation from Rover's Longbridge plant left the company's headquarters in Munich having pleaded for more time for the Towers bid. Few industry insiders last night gave Mr Towers much chance of satisfying BMW's demands, although members of the consortium said the offer was still "alive".

The Towers consortium took issue with the German company's announcement, claiming it had presented BMW with all the detail it needed.

John Hemming, a Midlands businessman who helped establish the consortium, said: "Yesterday we gave them full details about the banks involved and we gave them all the information about the other companies involved. What is it they are looking for?"

Mr Hemming insisted that the Phoenix deal "ends up" being better for BMW and its shareholders. "It is the fiduciary duty of the directors to give proper consideration to this bid," Mr Hemming said.

* Tata, The Indian conglomerate, said that reports that it was interested in building its Indica small cars at the Longbridge plant were untrue. The company had not signed a confidential agreement with BMW to scrutinise Rover's books and there were no immediate plans to build cars in the UK, the company said.