Rolls-Royce falls into German hands
Shareholders vote overwhelmingly in favour of VW's pounds 430m offer
Saturday 06 June 1998
Shareholders in Vickers, the parent company of Rolls, voted by a crushing majority to sell the company to Volkswagen for pounds 430m, ending almost a century of British ownership of the Rolls-Royce and Bentley makes.
The vote followed a highly charged and emotional four-hour meeting which culminated in a desperate but unsuccessful scramble by a group of Rolls- Royce enthusiasts to assemble a rival bid for shareholders to consider.
The meeting in central London was adjourned at one stage for nearly an hour to enable Michael Shrimpton, chairman of the Crewe Motors consortium, to put details of his offer to the Vickers board and its financial advisers while shareholders went for coffee.
But after the unprecedented interruption - dubbed the "coffee break bid" - the Vickers chairman, Sir Colin Chandler, emerged to tell shareholders that the consortium had failed to convince him, either about the identity of its backers or its financing.
He also said that the consortium, though styled as a British rescuer, appeared to be dominated by foreign interests. "We have listened to Mr Shrimpton on behalf of his foreign backers and the situation has not changed," Sir Colin said.
Mr Shrimpton, a 41-year-old barrister, arrived for the meeting at the Royal Horticultural Halls in Westminster in his chauffeur-driven Bentley Turbo and was helped through the media scrum by his driver, Barrington Shaw. He said he had been working day and night in the past week to assemble the bid and had access to pounds 500m in a Zurich bank account and a further $2bn in accounts in the Bahamas and elsewhere in Switzerland.
Crewe Motors, he said, had tabled a pounds 460m bid - pounds 30m more than VW - at 3.30 on Thursday afternoon, since when it had been waiting for faxes and the arrival of couriers to authenticate its offer.
However, Sir Colin said that there was no certainty about the availability of funds, the backers' identity and the time it would take to complete the offer. Dismissing the bid as an "undignified scramble to raise money without any substance", he urged shareholders to back the VW offer. "Any further delay will damage Rolls-Royce Motor Cars and you don't want that to happen."
The VW bid was then approved by a majority of 98 per cent. Of the 341 million shares in circulation, 209.6 million or 62 per cent were voted and of those only 2 per cent were against the sale to the German car-maker.
VW will need to negotiate a deal for the use of the Rolls-Royce name with the aero-engine company Rolls-Royce plc, which owns the trade mark. Rolls-Royce plc has the right to veto the use of the name by any foreign company but Vickers does not believe the veto is legally enforceable.
VW has 20 days from completion of the takeover - expected to take place on 3 July - to reach agreement with Rolls-Royce plc.
Small shareholders and Rolls-Royce fans did not go down without a fight yesterday. Peter Royce, the great-nephew of one of the company's two founders, Henry Royce, was present to witness his great-uncle's company pass into foreign hands. "How can you possibly do a deal like this?" he asked Sir Colin. "This is Britain and we do not do things like this in Britain."
Another shareholder, Peter Torre, a certified Rolls-Royce chauffeur from Hendon, north London, said: "When I put my uniform on I am very proud that I am driving a unique piece of machinery. It is sad to see the marque pass out of British hands."
One shareholder said the marque would have to be renamed the "Rollswagen". Another accused Vickers of "selling the birthright of British industry and all that goes with it."
The managing director of Rolls-Royce, Graham Morris, disclosed that he would have resigned if Crewe Motors had succeeded. "Not because I am anti- British but because I am anti-job losses," he said.
Alone among the almost exclusively British contingent of investors was one German shareholder, the general manager of BMW Alpine. He urged the meeting to reject the bid from the "nouveau riche" VW and accept the rival but lower pounds 340m offer from BMW. "Rolls-Royce and Bentley are simply the best of British tradition and they should join with an enterprise which is in a position to enlarge and preserve that heritage for Britain."
As soon as confirmation of the vote emerged, BMW said that ownership of Rolls-Royce was "no longer an issue" and confirmed it would cancel its contract to supply engines for the new Silver Seraph and Bentley Arnage. VW has made provision for this by signing a deal to buy the engine manufacturer Cosworth from Vickers for a further pounds 120m, which will now go through.
The outcome of the eight-month battle for control of Rolls-Royce paves the way for a three-way fight between Germany's leading car-makers for ascendancy in the luxury car market. BMW intends to press ahead with the BMW9 series - a competitor in the Bentley sector of the market - while Daimler-Benz is well-advanced with plans to launch a top-of-the-range car, the Maybach.
VW itself intends to launch a mid-sized Bentley in addition to the two- door Bentley and Rolls saloon range as part of its plans to quadruple output from Crewe to as much as 10,000 cars a year.
VW said last night that it had a deep respect for Rolls-Royce and intended to preserve the craftsmanship and exclusivity for which it was famous. However, shareholders were not so certain. One forecast that VW would "destroy the brand image". Another said: "I would not lay a level pound on VW keeping Rolls-Royce in Crewe."
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