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News > Deals
No rivals for Rolls?
April 29, 1998: 8:49 a.m. ET

Vickers has accepted BMW's $566M bid, but VW looms in rearview mirror
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NEW YORK (CNNfn) - British engineering group Vickers Plc said Wednesday that the road ahead seemed clear for German carmaker BMW AG in its proposed buyout of Vickers' Rolls Royce Motor Cars unit.
     But rival German suitor Volkswagen AG warned it may yet pull up in Rolls' rearview mirror to foil any high octane link-up between the luxury car makers.
     Munich-based BMW AG - owner of the British Rover, Mini and MG models - recently clinched the pole position in a two-car motorcade of Rolls-Royce bidders when it agreed to pay 340 million pounds ($566.2 million) in cash to Vickers for its highest-end asset, and pledged to invest more than $1.5 billion in the Rolls business.
     Colin Chandler, Vickers' chairman and chief executive officer, confirmed the done deal when he said in a statement Wednesday: "We are pleased to have achieved our objective of securing a very good deal for Vickers' shareholders and a strong new owner for Rolls Royce cars."
     In a separate statement, Vickers said it had reached a "full agreement" on the terms of the sale to BMW, which, given the size of the transaction, is subject to approval by Vickers' shareholders.
    
Not so fast, says VW

     But Volkswagen quickly retorted Wednesday by saying it was preparing to offer a premium to BMW's bid for Rolls, which was put on the block last September. VW did not disclose the size of the new bid may or when it would be tendered.
     A VW spokesman said: "If and when we are able to present an improved offer, the Vickers' shareholders will have the option to consider it in parallel (to the BMW offer)."
     BMW has agreed, in principle, to triple Rolls-Royce annual production from a current level of about 2,000 cars. VW's spokesman was quoted as saying that the German rival's plans call for pumping up to $3.3 billion in increased investment into Rolls-Royce and ramping up production to 10,000 cars a year across all marques and models.
     The unit Vickers has agreed to sell to BMW designs, manufactures and sells luxury motor cars under the Rolls-Royce and Bentley marques. In 1997, the units posted sales of $507.8 million and a before-interest profit of $44.1 million.
     A revised bid from VW is likely to allow Rolls-Royce to retain a degree of autonomy, though VW would install a management team at Rolls.
     Vickers named BMW a "preferred" bidder at the end of March, just ahead of an end-of-April deadline before the sale would have been thrown open to rival bidders.
     Vickers shareholders are expected to vote on the agreement at a meeting sometime by the end of May. But as of Wednesday, Vickers said it was yet to receive any rival bids for the unit, adding to the sense of a fait accompli.
     "At the moment, there is only one offer and it has been accepted," a spokesman said.Back to top

  RELATED STORIES

VW confirms Rolls bid - April 3, 1998

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