Vickers and Rolls-Royce disagree over sale veto

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The Independent Online
Vickers was at loggerheads last night with Rolls-Royce over whether the aero-engine company had the power to veto the sale of the Rolls-Royce luxury car business to a foreign buyer.

Under a 1973 agreement drawn up after the two halves of Rolls-Royce were split up, the consent of the aero-engine company is required if the car marque is transferred to a non-British owner.

Vickers said last night that it had received clear legal advice that the change of control provisions in the 1973 agreement were unenforcable under European Union law. A spokesman added that any attempt by the aero- engine company to exercise its veto would be a breach of article 85 of the Treaty of Rome governing restrictions on competition.

But a spokesman for the aero-engine company expressed surprise at Vickers' statement. He added that its legal advice was that the provisions of the agreement were enforceable and would be enforced if it was thought necessary to do so.

The dispute came as Vickers' advisers Lazards prepared to send out a memorandum of sale to interested parties. The document is being sent this week to six potential bidders - BMW, Daimler-Benz and Volkswagen of Germany, Chrysler of the US, the Japanese car maker Toyota and a consortium of wealthy Rolls-Royce owners led by the Formula One chief Bernie Ecclestone.

Vickers executives believe that the aero-engine company could attempt to stop a full auction for Rolls taking place by trying to deliver it into the hands of BMW with which it has a joint aero-engine company.

This could affect the price achieved since there are suggestions that BMW is only prepared to pay pounds 250m compared with the pounds 400m-pounds 500m that Vickers is hoping to raise.

Despite the legal squabble between the two sides, BMW is probably still the front-runner since it has a close working relationship with Rolls and is supplying the engine for its next generation of luxury models.