MAY 1, 2000
BMW still struggling with Rover
BMW'S desire to rid itself of the lame duck Rover Car company has hit trouble, with the venture capital company Alchemy withdrawing its offer last week when it failed to agree terms with BMW on which group would pay for redundancies. Under the Alchemy plan thousands of Rover workers at the Longbridge factory in Birmingham would have been laid off.
BMW is now talking to another consortium called Phoenix, which it had previously refused to negotiate with as it did not have sufficient funding for a deal. Phoenix is led by former Rover chief executive John Towers and includes the Mayflower automotive component business, Lola Cars and a number of Rover dealers, who all stand to lose out if Rover is closed down. Towers has now found more money but BMW is still sceptical that it will be enough to save Rover.
Rover's current chief Werner Saemann said that if the Phoenix bid is not successful "closure is inevitable" for the RoverĘGroup unless another offer emerges in the next five weeks. BMW is hoping that the British government will come to the rescue of Rover to try to save jobs at Longbridge. Phoenix is aiming to maintain mass-production at Longbridge.
BMW has spent nearly $4.5bn in the last six years trying to improve Rover's performance but decided to dump Rover when losses made BMW a target for takeover. There has long been speculation that BMW would not be able to survive the current consolidation in the automotive industry but the Quandt Family which controls almost half of BMW's shares has so far held out, despite approaches from most of the major car companies in the world, notably Ford, General Motors and Volkswagen. Although there is speculation that the Quandts will eventually sell out, German sources say that the Quandts are most likely to do a deal with Volkswagen, so that they can remain the biggest shareholder in a German company.
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