Rover lives to bark again

BMW AG has sold Rover once again, this time to Phoenix, the consortium of businessmen led by another former Rover man, John Towers.

Towers and his group won 200 million pounds sterling in backing from one of America's largest banks, First Union, to bolster the 500 million pounds sterling on offer by BMW.

To seal the deal, Phoenix paid BMW a nominal ten pounds sterling (about $26) for the Longbridge factory, the old Mini production line, the Rover 25, 45 and 75 sedans and hatchbacks and the MGF sportscar.

What Phoenix doesn't get is the new BMW-developed Mini, the state-of-the-art BMW built factory in Oxford, or Land Rover (which BMW has already agreed to sell to Ford Motor Co).

BMW thought it had disposed of Rover in a blaze of media criticism back in April when it agreed to pay investment capital group Alchemy Partners to take Rover off its hands. That deal went sour about ten days ago when Alchemy failed to comply with some of BMW's financial requirements.

Phoenix was waiting in the wings with its deal to convince BMW it would be the best partner for Rover's future. Alchemy had suggested cutting the Longbridge workforce significantly and reducing the rump of Rover to a minor niche player.

The Phoenix plan is aimed at maintaining Rover almost as is as a mass producer (building as many as 200,000 cars a year) and vitally, retaining the thousands of jobs that rely on the Birmingham factory directly or indirectly through component suppliers. About 50,000 jobs would be affected if Longbridge closed, hence the extreme British Government pressure on BMW to ensure a successful sale.

Phoenix is expected to order about 1000 job cuts from the 9000-strong Longbridge plant.

"After intense negotiations, we have managed to find a buyer for Rover whose aim is to continue to run Rover and who will therefore prevent the loss of thousands of jobs in the Rover plant in Birmingham, in the supplier industry and in the retail business," BMW Chief Executive Joachim Milberg was quoted as saying in a Reuters report.

Phoenix will get the MG brand and several other now defunct heritage brand names held by BMW but curiously not the Rover brand.

Speculation from some sources suggests that Ford Motor Company insisted that BMW retain the Rover brand as part of Ford's deal to buy Land Rover.

Apparently, Ford did not want another US rival buying the shell of Rover and then being able to market vehicles to compete with Land Rover under the Rover badge.

The relief at BMW is expected to be huge given that Rover was bleeding to the tune of two million pound sterling each day or about $5 million a day.

BMW threatened that it would simply close Rover down if a buyer could not be found, but it is believed BMW did not want to take this route because of the immense cost of redundancies, not to mention the adverse political fall-out.

Ironically, Rover's passenger cars sales in April were at a 20-year high while BMW sales slumped more than 20 per cent.