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BMW victory lap delayed
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March 31, 1998: 3:12 p.m. ET
Rolls-Royce is back in talks with Volkswagen one day after BMW deal
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NEW YORK (CNNfn) - German auto maker BMW AG's victory lap after having won the race for Rolls-Royce Motor Cars will have to wait, as Volkswagen AG is still in the race.
"VW is back in discussions with Vickers about the possibilities," Rolls-Royce Chief Executive Graham Morris said Tuesday.
Volkswagen, which was thought to be out of luck after Vickers PLC, parent of Rolls, said it accepted BMW's offer of $572 million in cash, shifted into high gear Tuesday and raised its bid from $813 million to as much as $940 million.
Officials at Volkswagen wouldn't comment on the higher offer, reported in the German newspaper Bild.
Vickers' initial refusal of a VW offer that was at least $250 million higher than BMW's is the result of BMW's deft use of its ace in the hole.
BMW is the supplier of engines for Rolls-Royce and its Bentley luxury cars. BMW has stated outright that if another bidder were to win Rolls-Royce, it would cut off its engine shipments as soon as it was able to do so.
VW's apparent resolve in continuing to fight for Rolls stems from its stated strategy of entering the luxury car market. If it fails in its grab for Rolls, it would most likely have to develop its own deluxe models.
BMW North America Chief Executive Officer Henrich Heitmann said he was unconcerned about other firms trying to get the inside track and that BMW was unlikely to be pushed into a bidding war.
"We have a long-term relationship with Rolls-Royce," said Heitmann. "These corporations are very close. Certainly there are other people interested in Rolls-Royce, but let's see what the shareholders have to say to it."
Vickers shareholders are scheduled to vote on the BMW proposal in the middle of May and the German auto firm said it expected to complete its purchase by mid-1998. Historically, Vickers stockholders have seconded the opinions of the board, which has already approved the buyout.
Despite BMW's apparent confidence, it attempted Tuesday to alleviate concerns that its acquisition would dampen Rolls' reputation for British sophistication and style.
To that end BMW said it was committed to maintaining the Rolls-Royce facility and workforce located in Crewe in Britain. It also promised to keep the "English pattern" of naming a board with both executive and non-executive members.
"Rolls-Royce must stay as absolutely British as possible," said BMW chief Bernd Pischetsrieder.
-- from staff and wire reports
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