Phoenix deal saves Rover from closure
BMW sells Rover Cars to Phoenix [9 May '00] - BMW
MSF welcomes the success of the Phoenix bid for Rover [9 May '00] -
Manufacturing, Science and Finance Union
Keep Rover running campaign - Transport and General Workers Union
Rover Task Force
Rover
Amalgamated Engineering and Electrical Union
Press releases - Department of Trade and Industry [DTI]
MG Cars
DTI
THE Phoenix consortium today announced that it had finalised a deal with
BMW which would save the threatened Rover factory at Longbridge in Birmingham.
John Towers, head of the consortium and a former BMW executive, announced
that it had acquired Rover for a symbolic purchase price of £10 following
several days of intense negotiations. Contracts had been signed and completed
at 8.30 this morning. Phoenix said it will take over responsibility for the
development, production and distribution of all Rover cars. It will also
acquire the MG brand and it will continue building the Rover 25, 45 and MG
sports car at Longbridge.
In addition, production of the Rover 75 will be switched from Cowley in
Oxford to the Birmingham plant. Phoenix said it also has plans to start
producing an estate version of the Rover 75. BMW chairman Joachim Milberg
said: "After intensive negotiations we have managed to find a buyer for Rover
whose aim is to continue running Rover and to therefore prevent the loss of
thousands of jobs in the Rover plant in Birmingham, in the supply industry
and in the retail business."
Mr Towers said: "We are delighted that together with BMW we have secured a
brighter future for Rover and its stakeholders. This is the first step in a
series of changes which will fully justify the confidence and support which
has kept this process going." The deal secures the jobs of several thousand
workers at Longbridge and thousands of others in firms across the West
Midlands which supply the huge factory with parts and other services.
There will still be redundancies at Longbridge but on a far smaller scale
than if Rover had been bought by venture capitalist group Alchemy Partners,
which surprisingly pulled out of negotiations last month. Phoenix has secured
around £200 million backing from America's First Union Bank and is believed
to be receiving £500 million from BMW.
Negotiations between Phoenix and BMW began last Tuesday and continued
throughout the weekend as hopes were raised that a deal could be achieved.
Analysts remained sceptical that Mr Towers could raise enough finance but
today's announcement is a dramatic achievement for the quietly-spoken former
Rover chief executive.
He will now be regarded as a hero throughout the West Midlands for saving
Rover from closure. BMW had warned it would have no alternative other than to
close Rover if a sale was not agreed by the end of this month. Department of
Trade and Industry Secretary Stephen Byers welcomed the development, he said:
"I spoke to John Towers about an hour ago. He had just signed the deal with
BMW. He was relieved and in a really good mood and understandably so.
"Three weeks ago when I got the Towers Consortium together with BMW and
facilitated their first meeting, I was criticised in many quarters for
getting involved in that way. I think we were right then and I think today we
are seeing the results of that." Mr Byers acknowledged that not all the jobs
at Longbridge would be saved. He said: "The John Towers proposals will
involve a number of jobs being lost, but it is a prospect which is far better
than we were seeing two or three weeks ago."
Mr Byers said the Towers bid was not being underwritten by Government money.
He said: "John Towers has been very clear, he wanted this proposal to be
commercially viable without public subsidy. That is the case. We will give
normal support that we would give to any business in terms of retraining,
helping with skills, supporting wider regeneration. But there is no
Government money going in to act as some form of risk capital to support this
venture."
Union leaders warmly welcomed the announcement . Roger Lyons, general
secretary of the Manufacturing, Science and Finance Union said: "This is
wonderful news. Our campaign and support for the Phoenix bid has saved jobs
throughout the West Midlands and the rest of the country." Sir Ken Jackson,
general secretary of the Amalgamated Engineering and Electrical Union, said:
"This is tremendous news. It saves thousands of jobs and gives Longbridge a
secure future. I am absolutely delighted for the whole workforce."
Tony Woodley, of the Transport and General Workers' Union, said the members
were absolutely delighted that the Phoenix consortium had succeeded. He said:
"We've worked extremely hard, thousands of hours of work, with the Towers
team to be able to limit the damage after the industrial disaster that BMW
left us with. Our aim was to save as many jobs in the short term as is
humanly possible and, just as importantly, to maintain the fabric of the
plant to allow it to stay in car building."
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