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Minardi and Audi rumors

THERE were rumors after the Spanish Grand Prix that Volkswagen's Audi subsidiary is looking at buying the little Italian team. These should not be taken too seriously as the fact that there was a Audi executive with Minardi for the weekend should not be a surprise as Minardi boss Gabriele Rumi also runs Fondmetal Technologies which does all the windtunnel development for the Audi A8 sportscar team.

There is no doubt that Rumi is trying to sell his shares in the Minardi holding company and it is now increasingly clear that Spanish telecommunications company Telefonica is not going to buy them. Telefonica wants the exposure that F1 has to offer but does not appear to be very interested in owning a team. This has meant that the company has become a target for teams looking for sponsorship and there is little doubt that Flavio Briatore of Benetton is at the front of the queue. Given that Telefonica now invests around $20m for virtually no television coverage, it should not be too difficult for Briatore to sell them on Benetton. He is proved many times in the past that he can be very persuasive. At the same time, Telefonica is busy trying to keep an eye on its own future as there are increasing rumors that the company is going to become the target for another British Telecom takeover bid.

Volkswagen will probably end up in F1 but it may not be for two or three years and, in all probability, it will come as the result of the company's takeover of BMW. The Munich manufacturer continues to say that it is going to remain independent but that will largely depend on the Quandt family which has so far refused to sell its 48% shareholding in BMW, despite some tempting offers. The Quandts like to be important players in the German automobile industry and so it is expected that if they do sell the deal will take the form of some kind of share-exchange arrangement which will result in the Quandt's emerging as the biggest shareholders in VW. In effect it would be a little like the recent British American Tobacco takeover of Rothmans which left the Rupert Family (the previous owners of Rothmans) as the biggest shareholders in BAT.

There has been speculation that this will not happen until 2002 when the current VW chairman Ferdinand Piech retires. His place is expected to be taken by Bernd Pischetsrieder, who will shortly become head of the SEAT car company (a VW subsidiary). Pischetsrieder was formerly chairman of BMW and a man the Quandts trust. It may also be significant that there are heavy capital gains tax burdens in Germany if the Quandts sell. These laws will be changed next year.

BMW appears to have finally solved its problem with the Rover Group by agreeing to hand over the company to a group of British investors called Phoenix for the nominal sum of $15.

The Rover Group is reckoned to be losing about $3m a day and has cost BMW around $4.5bn in the last six years. BMW has agreed to loan Phoenix $750m to cover the costs of restructuring. Further money has been raised to keep Rover going from a British subsidiary of the First Union bank.

According to press reports Phoenix now intends to offer half the company to Honda but sources from Japan say that Honda is not really interested as it has other problems to worry about. Honda last week reported a 14% drop in profits in the last financial year although a profit of $2.4bn is still useful. Honda says it expects another drop in profits this year and is aiming to reduce its dependence on the US market by a sales push in Europe and Asia (which will be helped by the current F1 program) and by cutting costs by improving its production lines.

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