The future of Rover was plunged into further doubt today when talks aimed at
selling the car giant to venture capitalist Alchemy Partners dramatically
broke down.
German owners BMW said it would now pursue "alternative routes" to bring its
troubled involvement with Rover to an end.
"These routes include the sale of Rover Car Operations or its closure," BMW
said in a statement from its Munich headquarters.
The German carmaker said a decision on the future of Rover will be taken over
the next month, giving more time for an alternative bid to be finalised.
The move followed a shock announcement that talks between BMW and Alchemy,
which had been expected to lead to a deal today or tomorrow, had suddenly
ended.
BMW said it was unable to reach agreement with Alchemy because of "certain
conditions of contract".
The statement said: "BMW Group will now pursue alternative routes to bring to
an end its involvement in Rover car operations."
Alchemy said talks had been progressing well until as recently as yesterday,
when a number of "new financial conditions" were believed to have been
raised.
A brief statement from Alchemy read: "Alchemy Partners and BMW have ceased
negotiations as they were unable to agree upon certain contractual matters,
some of which arose yesterday.
"Alchemy Partners thanks BMW for its constructive and cordial negotiations
and wishes Rover and its employees well for the future."
The development gives fresh hope that a bid led by former Rover executive
John Towers, which promises fewer job losses, can now succeed.
BMW appeared to deliver a knockout blow to Towers' Phoenix consortium
yesterday when it said it had not provided information on its financial
backing.
But today's news offers a breathing space, especially for workers at the huge
Longbridge factory in Birmingham where most jobs are at risk.
The plant is on an extended Easter shutdown, but workers at the site were
overjoyed that the Alchemy deal had collapsed.
Unions also welcomed the breakdown, although they warned that the next few
weeks would be critical.
The Department of Trade and Industry said: "BMW's announcement provides a new
opportunity for proposals to come forward which offer a viable future for
Longbridge and which might provide more jobs than under the Alchemy proposal.
"Our efforts over the next few weeks will be directed towards achieving a
successful outcome which will serve the interests of the workers at
Longbridge and the wider community in the West Midlands."
Sir Ken Jackson, general secretary of the Amalgamated Engineering and
Electrical Union, said: "We now have a month to save Longbridge. BMW must
pull out all the stops to save the plant and 50,000 jobs that depend on it.
"The workforce is left hanging on once again while its future is decided."
John Edmonds, general secretary of the GMB union said: "We have finally seen
Alchemy's true colours. It is quite clear they never had any intention of
securing the long term future of Longbridge.
"We now have an opportunity to sit down coolly and calmly and secure a deal
that safeguards the future of Longbridge."
The few workers who remained at Longbridge over the Easter period were in
jubilant mood. A group of around 20 gathered outside the site's Q Gate and
clapped and shouted while drivers hooted their horns as they drove past the
sprawling site.
Terry Reilly, 46, a Longbridge worker for 11 years, said: "It's absolutely
superb news. We have always said Alchemy was bad news for this plant - they
are asset strippers who intended to sell off the best bits and leave people
out of work."
However, not all workers were happy. Sammy Singh, 18, said: "Our futures are
still unclear. Alchemy had a long term strategy and whoever takes over we
could be faced with the same problem in three months' time."
BMW's shares plummeted 8% in Frankfurt in the minutes following the news,
later stabilising slightly to be 5% weaker.
Shadow trade and industry secretary Angela Browning described today's news as
a serious development.
"Certainly it will give the Phoenix bid the opportunity to be considered in
more detail, which was clearly needed from the comments that BMW made
yesterday.
"But I am concerned that we are now in an all or nothing situation and I
think it does need (Trade and Industry Secretary) Mr Byers to try and
persuade BMW not just to look at the Phoenix bid but to see if anything can
be salvaged from Alchemy because I am very concerned about the BMW comment
today that within a month they may consider closing Rover altogether," she
told BBC Radio 4's The World At One,
Liberal Democrat trade and industry spokesman Vincent Cable described
Alchemy's withdrawal as "potentially good news".
"It opens the way to a serious bid from the Phoenix group which offers the
opportunity for large scale car production and has the backing of the
workers, the management and other stakeholders in the area, so that is good
news.
"But I think what has to now happen is that Mr Byers has to intervene to play
an honest broker role to get the bid properly considered by BMW, doing
something to retrieve his reputation and potentially pulling the irons out of
the fire."
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