NEW YORK (CNNfn) - If you can't beat 'em, break 'em. Such is BMW's latest fighting posture as it wrestles to loosen the hammerlock of Volkswagen AG's $715 million takeover bid for Vickers Plc's Rolls-Royce Motor unit.
The Munich-based luxury carmaker said Thursday that it would stop supplying engines and other components to Rolls-Royce Motor cars if Vickers' shareholders approved VW's bid for Rolls-Royce. That bid topped BMW's earlier rival offer of $557 million.
BMW's deal with Vickers had seemed headed for the history books until VW began elbowing in on the bidding action late last month.
The takeover tit-for-tat culminated with an announcement by Vickers Thursday that its directors had accepted VW's offer and would recommend the deal to its shareholders.
Vickers' shareholders are set to vote on the VW offer June 4. They must also approve the decision to terminate the earlier deal with BMW.
Name fight begins
Muddling the buyout scenario further, aero-engine maker Rolls-Royce Plc asserted Friday that the European Commission had backed its claim to final rights over who can use the Rolls-Royce name.
Vickers shot back that the EC's position was merely a non-binding "preliminary view" and that the commission was withholding final judgment in the matter. The Rolls parent also insisted the sale and the issue of future rights to the Rolls brand are separate matters.
"This will be an issue for VW," a Vickers spokesperson said. "Ultimately, they will have to thrash it out with Rolls-Royce Plc."
Rolls-Royce said it has not held substantive talks with VW to discuss the brand name issue.
New offer from BMW?
BMW said Thursday it had no plans to make a second offer for Rolls-Royce, according to news reports. However, Ferdinand Piech, VW's chief executive officer, told a German newspaper Friday that it was "fully possible" BMW would sweeten its bid.
Piech also raised doubts about BMW's ability to emerge the victor in any bidding war, and he reportedly dismissed as "sabre rattling" BMW's threat to stop supplying engines for the new Rolls Silver Seraph car.
In accepting BMW's initial bid for Rolls-Royce April 29, Vickers Chairman Colin Chandler said the companies had reached "full agreement" on the terms of the sale.
BMW had pledged to buy the prestigious carmaker for cash and invest $1.5 billion in the Rolls-Royce business. BMW also agreed to ramp up annual production of Rolls-Royce cars to 2000, triple the current level.
In its counter offer, VW said it planned to invest as much as $3.3 billion in Rolls-Royce and produce up to 10,000 cars a year across all marques and models.
The Rolls-Royce Motor Unit designs, sells and manufactures luxury cars under the Rolls-Royce and Bentley marques. The unit reported total sales of $507.8 million in 1997.
-- from staff and wire reports