MG Rover quells rumours of sale to Shanghai Auto

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The Independent Online

MG Rover moved swiftly yesterday to dampen growing speculation that the UK's last indigenous-owned volume car maker is to be bought by the Shanghai Automotive Industry Corporation (SAIC) of China.

MG Rover moved swiftly yesterday to dampen growing speculation that the UK's last indigenous-owned volume car maker is to be bought by the Shanghai Automotive Industry Corporation (SAIC) of China.

A spokesperson for MG Rover said it couldn't yet give more guidance on the strategic relationship with SAIC that the two companies announced on 16 June. One reason might be that the detailshave yet to make their way through the Chinese government's bureaucracy. Full approval should happen towards the end of the year. "To date MG Rover has not received any approach from SAIC to take an equity stake," said a source at the company last night.

The SAIC deal is MG Rover's second attempt to link with a Chinese company, following the collapse of China Brilliance.

Reports in the motor trade press suggested that SAIC was intent on moving rapidly to gain full ownership of MG Rover. Automotive News Europe quotes Chinese sources as stating: "SAIC will buy MG Rover. When the announcement is made depends on the progress of the negotiations, hopefully in a few months." The magazine also attributed these words to an MG Rover source: "There is an absolute and definite plan which seems to start with some kind of joint deal.... Two or three years from now I would imagine SAIC to have the majority of the company. The relationship is good."

MG Rover's chairman, John Towers, later denied that SAIC was poised to buy the company. He told the BBC: "We have already made it clear that we are in major collaboration with Shanghai Auto, but I have to say that within those discussions there has been no discussion at all about an equity stake or an acquisition of the business."

SAIC has a stated aim of becoming the world's No 6 car company. It already has an agreement to manufacture obsolete Volkswagen and General Motors models for the Chinese market, which doubled in size last year. Last month it announced that it had bought the South Korean concern Ssangyong Motors.

A takeover by Shanghai would spell the end for MG Rover's budding relationships with Proton of Malaysia and Tata of India. It would also provide a reasonable return for the Phoenix Consortium, which bought MG Rover from BMW for a nominal £10 in May 2000.

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