Volkswagen trumps BMW's pounds 340m bid for Rolls-Royce

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The Independent Online
THE FUTURE ownership of Rolls-Royce was thrown wide open again yesterday after the company confirmed that Volkswagen of Germany had submitted an increased offer in competition with the agreed pounds 340m bid tabled by its German rival BMW on Monday.

Graham Morris, the chief executive of Rolls-Royce, said last night that VW had tabled a fresh bid but declined to disclose the price it had offered.

According to reports circulating in Germany, the VW chairman Ferdinand Piech is prepared to pay "almost any price" for Rolls. Today's edition of the German newspaper Bild even claims that VW filed an improved offer on Monday worth 1.7bn German marks (pounds 550m).

VW refused to comment and Vickers, Rolls' parent company, said it was "very happy" with the agreement in principle signed with BMW, which also owns Rover. "It offered the best deal for shareholders and for the long- term future of the company," a spokeswoman said.

But Vickers made clear it had not closed the door altogether on rival higher offers, adding: "We will continue to manage the sale process in the best interests of shareholders."

Vickers has agreed to give BMW a four-week period of exclusivity to finalise the terms of the deal. It has undertaken not to consider any other bids during that period. But if it is clear VW would pay a higher price, Vickers would expect that to be reflected in its negotiations with BMW.

Mr Morris said he expected BMW to keep its supply contracts with his company no matter which company bid successfully in the end.

Bernd Pischetsrieder, the chairman of BMW, accepted yesterday that it might be out-bid but said he would make only one offer for Rolls. Speaking at the group's annual results press conference in Frankfurt, Mr Pischetsrieder said: "I cannot rule out that others make further, higher offers. It is possible."

Bild says today that VW's original offer was worth DM1.5bn and that it was prepared to increase this by DM200m. VW is also reported to have offered to buy Vickers' specialist engine business, Cosworth.

Sources close to Vickers said VW's initial bid was slightly more than pounds 300m and that the DM1.5bn (pounds 484m) figure quoted in Germany included proposed investment in the business.

BMW, the front-runner to acquire Rolls ever since Vickers put the business up for auction last autumn, has pledged to invest pounds 1bn in the Rolls and Bentley marques over the next decade, double the workforce at Crewe and triple output. Part of its plans includes production of a Bentley sports car.

Speaking yesterday, Mr Pischetsrieder said: "There could be a few surprises coming from Crewe." He also reiterated BMW's commitment to Crewe, stressing that the business would retain its local identity and would have a British- style board with non-executive directors.

Vickers is due to seek shareholder approval for the sale at an extraordinary meeting in May. The board is certain to face hostile questioning from a group of Rolls owners whose bid for the company was rejected. The Rolls- Royce Acquisition Consortium is chaired by Kevin Morley, former marketing director of Rover. Donald Longmore, secretary of the consortium, has accused BMW of conducting a "rape of British industry".

The news that BMW had won Vickers' backing for Rolls-Royce threatened to put pressure on fellow German carmakers to follow suit with their own luxury limousines, raising worries about overcapacity in the market segment.

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