VW trumps Rolls rival with pounds 430m

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The Independent Online
THE SAGA surrounding the tussle for control of Rolls-Royce Motor cars, the luxury British marque, took another twist yesterday after Vickers, its parent company, announced it had switched its allegiance to Volkswagen from BMW.

Even as the dust settled on the Daimler-Chrysler deal, Vickers said it had reached agreement to sell Rolls-Royce to VW for pounds 430m, which was pounds 90m better than the rival offer from BMW.

The move comes just eight days after Vickers announced it had agreed terms with BMW and announced plans to return pounds 188m to investors.

In a statement after the stock market closed Sir Colin Chandler, Vickers' chairman, said: "Throughout the Rolls-Royce Motor Car sales process, we have focused on achieving the maximum value for our shareholders and this remains the case.

"I am confident as to the strong prospects for Rolls-Royce Motor Cars under the ownership of either BMW or Volkswagen - both are leading players in the luxury automotive segment, capable of continuing to develop this premier business."

The final decision on Rolls-Royce's future will lie with Vickers' shareholders who will vote on the alternative offers at special meetings on 4 June.

If the new deal goes ahead, investors will land a windfall of pounds 273m, against a pounds 188m payout under the BMW offer.

Roger Lyons, general secretary of the MSF union, which has so far welcomed the BMW deal, said: "We were very laid back about the BMW bid because we have a very positive relationship with them as far as Rover is concerned.

"The unions will now have to look very hard at the small print to check to see if the same assurances that were given by BMW have been given by Volkswagen."

The Volkswagen offer deals a massive blow to BMW's ambitions of increasing its hold on the British motor industry.

BMW already owns Rover and supplies German-made engines for Rolls-Royce, but Volkswagen plans to use British-made engines.

The City was not taken aback by the deal as Vickers had said last week it had not closed the door on VW.

Phillipe Houchois, an analyst at Standard & Poors DRI, in London said: "I am not surprised (by the deal) in the sense that with the pressure from institutional investors they had to consider a higher offer.

"The objective of institutional investors was always going to be maximising return on investment. VW has all the tools and all the skills necessary to develop and invest in Rolls."

Another said: "It would make sense for BMW to act but this is just what it was trying to avoid, it's turning into a bidding war.

"VW needs Rolls-Royce more than BMW does. BMW has told us more about what it plans to do with Rolls. This is a once-in-a-lifetime situation."

Aero-engine maker Rolls-Royce Plc, owner of the Rolls-Royce brand name, said its preferred outcome for Vickers' sale of Rolls-Royce was still for Vickers shareholders to accept the bid from BMW. BMW said it had no comment.

- Agencies