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VW confirms Rolls bid
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April 3, 1998: 8:23 a.m. ET
Volkswagen offer may top BMW's, but Vickers may not be listening
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NEW YORK (CNNfn) - German automaker Volkswagen AG confirmed on Friday that it made an "improved offer" for Rolls-Royce Motor Cars in an attempt to thwart BMW AG's bid for the luxury car firm.
Volkswagen said it sent its offer on Monday to British engineering firm Vickers Plc, which owns Rolls-Royce. Vickers officials were not immediately available for comment.
Volkswagen would not specify the price of its bid but sources close to the deal told Reuters news service that the cash offer was approximately $600 million to $632 million. The VW offer would top BMW, which agreed on Monday to pay $570 million for Rolls.
Initially, Vickers stood firm, saying its agreement with BMW precluded it from negotiating with anyone else for a period of around three to four weeks. However, on Tuesday it acknowledged that other companies could submit offers if they wanted to.
What followed were more mixed signals from Vickers about its relationship with VW. Rolls-Royce Chief Executive Graham Morris was quoted as saying that "VW is back in discussions with Vickers about the possibilities." Soon afterward, Vickers contended that Morris had merely confirmed he saw published reports to that effect.
All along, BMW has admitted that it expected others to have interest and submit bids for Rolls, which also makes the Bentley line of luxury cars.
That attitude is not as magnanimous as it would appear. BMW makes the engines, among other parts, for Rolls-Royce and Bentley. It has flatly stated that if another bidder wins out, BMW will stop supplying its engines.
The threat has scared off some suitors but BMW appears confident that it will not come to such a confrontation. BMW's offer has already received the approval of Vickers' board of directors and that company's stockholders usually second any board recommendations.
Vickers' support for the BMW offer comes not only from BMW's crucial parts supplies but also from BMW's status as a luxury car maker. VW also has designs on the luxury auto market but, at least for now, has little experience in it, whereas BMW's name is much more synonymous with the high-end market, according to analysts.
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