NOVEMBER 10, 1997
More action at Vickers
THE future of Cosworth Racing remains uncertain with rumors that the car components firm Mayflower is to launch a hostile takeover bid for Vickers, Cosworth's parent company. BMW is rumored to be planning to bid for the entire group, rather than just buy Rolls Royce Motor Cars. Both Mayflower and BMW want Rolls-Royce and Cosworth while Vickers's defense businesses would be sold off.
Mayflower makes car bodies for a number of manufacturers, including Mercedes-Benz, Ford, General Motors, Chrysler, Rolls-Royce and Rover but it has a reputation as an aggressive corporate raider. It was formed eight years ago after a leveraged buyout of toymaker Triang. A year ago it increased its customer base considerably in a $165 million takeover of the American firm South Charleston Stamping & Manufacturing.
Mayflower is a much smaller company than Vickers - its shares valued at around $790m compared to those of Vickers which are worth around $1.3bn.
Vickers has become attractive to corporate raiders because of the company's weak share price and the availability of cash which has been generated by the sale of its medical divisions to Hillenbrand Industries for a rumored $135m.
In recent days there have been rumors of new tank deals with Middle Eastern countries, which are rumored to be worth nearly $700m, and on Sunday the company's chief operating officer Chris Woodwark signed a deal with Oman for 20 Challenger 2 tanks.
Another deal is expected to be announced shortly with the Qatari government. These deals, designed to relaunch the company's faltering armored vehicles business, are part of a rescue plan being formulated, which will involve either a takeover or a merger with the armored vehicles division of GKN. This would be financed with the $835m expected to be raised by the sale of Rolls Royce.
In a letter to shareholders Vickers chairman Sir Colin Chandler urged shareholders not to sell their shares at the moment and hinted that some of money raised from the sales might be used for a special dividend for shareholders.
One way or another the future of Cosworth will remain uncertain until it is known what will happen to Vickers - and that is bad news for the Ford's F1 program.
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