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BMW wins Rolls rally
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March 30, 1998: 8:27 a.m. ET
German auto maker buys luxury car firm Rolls-Royce for $572 million
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NEW YORK (CNNfn) - A higher bid and a little aggressive driving helped German auto company BMW AG win the race for Rolls-Royce Motor Cars on Monday, leaving German opponent Volkswagen in second place.
Vickers Plc, the British engineering firm, said BMW will pay $572 million in cash for the venerable Rolls-Royce, which also makes the Bentley line of luxury cars.
BMW edged out rival Volkswagen to win Rolls. BMW not only topped VW's offer but also used threats to convince Vickers.
BMW makes the engines for Rolls-Royce's cars and threatened to cut off that supply if anyone else won the company. Under a contract, BMW is obligated to supply Rolls for several more years. But the threat of a supply disruption was apparently enough to prevent some bidders from entering the race and giving BMW the inside track.
Vickers Chairman Sir Colin Chandler proclaimed himself "delighted" at the high level of interest it received for Rolls.
"The Vickers board believes BMW's offer for Rolls-Royce is the most attractive in terms of achieving the best value for our shareholders and ensuring the continued success of this unique company," said Chandler.
It will now be up to shareholders and regulators to approve the deal. Vickers said that part of the proceeds from the sale would be returned to its stockholders and it would invest the balance in its other businesses, including armored vehicles, engines, and marine propulsion equipment.
No job cuts are expected after BMW takes over Rolls, said Vickers.
Volkswagen appeared unmoved by BMW's victory and said it would pursue other options. "It is our aim to establish ourselves in the luxury brands," said VW spokesman Kurt Rippholz.
While VW accepted defeat, a platoon of Rolls-Royce enthusiasts said they would fight BMW's takeover.
The group, known as the Rolls-Royce Acquisition Consortium, said it had enough money on hand to beat BMW's offer.
"We will top it to above BMW's bid," said the group's secretary Donald Longmore. "Where are we getting our money from? We can't tell you. Some of our investors are American, Australian, from New Zealand."
In addition to its financial challenge, the group said it will also launch a massive public campaign against the deal.
Fall of the British auto empire
In 1973, Rolls-Royce was floated on the stock market by the British government after it rescued the company from bankruptcy two years earlier.
Vickers bought Rolls in 1980. During its tenure, Vickers overhauled the company and relaunched its Bentley line of autos. However, the company continued to lose money. In 1991, Vickers cut back on production and reduced the workforce by about 50 percent.
The reorganization had the intended effect and returned the company to profitability but by then Vickers had decided to focus on its defense units and put the company up for sale.
BMW has already added a number of well-known British automobiles to its garage, including the Land Rover, the Mini and the MG.
With the deal, the most famous English automobiles are now owned by non-British firms. Jaguar, another British icon, is owned by the United States' Ford Motor Co.
-- from staff and wire reports
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