By Jane Croft, Financial Times
Published: April 28 2000 09:03GMT | Last Updated: April 28
2000 13:21GMT
BMW, the German carmaker, said it would
consider alternative
bids for its UK Rover subsidiary after a deal
with Alchemy, the
UK venture capital group, collapsed on Friday.
Alchemy and BMW had expected to
conclude a deal this week or early next
week but said on Friday they had been
unable to agree on "certain contractual
matters". BMW added that it was also considering the
possibility of closing its Rover subsidiary down.
The development raised hopes that the UK government
would intervene to support the alternative bidder, the
Phoenix consortium.
BMW indicated it would be prepared to re-start talks
with Phoenix, which is led by Birmingham-based
businessman and former Rover chief executive John
Towers.
The German company had previously rejected Phoenix's
approach, saying that it was unconvinced that it had
financial backing in place.
Stephen Byers, the UK secretary for trade and industry,
is set to speak to John Towers and BMW later on
Friday.
The government said in a statement: "Our efforts over
the next few weeks will be directed towards achieving a
successful outcome which serve the interests of the
workers at Longbridge."
Bill Morris, general secretary of the T&G union, said:
"BMW should start talking with John Towers
immediately. BMW should stop playing roulette with
our members jobs."
If a deal cannot be agreed within the next month about
8,500 jobs will be put at immediate risk at Rover's main
plant at Longbridge, in the West Midlands. BMW's total
UK workforce is 29,000.
Jim Wright, autos analyst at Lehman Brothers, said: ''If
BMW do not get a deal quickly they are certain to close
Longbridge down. They will probably try to sell the MG
brand but they are not interested in supporting a
company which is losing £2m a day.''
The earlier Phoenix bid for Rover would involve fewer
job losses than the 3,000 job cuts proposed by Alchemy.
Phoenix planned to produce about 250,000 cars a year at
Longbridge.
Before Friday's announcement, unions had threatened to
try to block the sale to Alchemy by taking out a High
Court injunction alleging that BMW had breached rules
on employeeconsultation.
Reports suggested that BMW and Alchemy fell out over
the amount Alchemy would have to pay in pensions
liability and redundancy payments but neither would
confirm this.
BMW said that the collapse of the Alchemy deal does
not affect preparations for the transfer of the Land Rover
brand to Ford which will be completed by the middle of
the year.
BMW shares were down 2.5 per cent at E29.44 by
mid-afternoon Friday.
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