Rover, Britain’s Last Auto Giant, Going to BMW : Mergers: The $1.2-billion deal is criticized by 20% shareholder Honda as a threat to the firm’s ‘Britishness and Roverness.’
The Rover car company, Britain’s last major auto maker, announced Monday that it is being sold to Germany’s BMW for $1.2 billion.
The sale by British Aerospace, which owns 80% of Rover’s stock, is expected to allow Rover to expand its markets, selling its cars through BMW outlets in the United States and Europe.
However, the deal was criticized by Japanese auto maker Honda, which has a 20% stake in Rover and helped transform the company by revamping its product range and introducing modern cost-cutting practices on the assembly line. While Honda will keep its stake, the long-term future of its collaboration with Rover is in doubt, industry sources said.
“We have been cooperating with Rover for 15 years with the aim of maintaining the Britishness and Roverness of the indigenous British company,” a Honda spokesman in Tokyo said.
The surprise sale “negates Honda’s and Rover’s long-term efforts to establish a firm future for Rover as a British company with its own brand identity,” Honda President Nobuhiko Kawamoto said. “Honda has always felt that a key to the success of this partnership was Rover’s independence.”
The deal, which must be approved by British Aerospace stockholders and government regulators, is also expected to draw criticism from British government opponents. They claimed that the sale of Rover to British Aerospace in 1988, when Rover was a nationalized company, was at a much undervalued price, costing taxpayers millions of dollars.
Shares in British Aerospace soared Monday as financial experts said the sale price was much higher than had been expected and partly explained why British Aerospace decided to unload.
Rover ran up losses of $13.5 million last year but was expected to rebound sharply this year.
The sale in effect means the end of a British-owned volume car industry. With Jaguar sold to Ford Motor Co. nearly five years ago, Rolls-Royce is the only of the great names of British motoring history that still remains in British hands.
BMW will acquire Rover with its debts and pay in two installments: $840 million on the sale completion and $360 million on June 30.
In Munich, BMW Chairman Bernd Pischetsrieder said: “The Rover and BMW model ranges complement each other. In addition, our differing regional strengths provide a powerful synergy.”
In the sale, British Aerospace agreed to deliver all the trademark names of the line: Rover, Land Rover, MG, Triumph and Austin. Rover was the latest name for the company that during this century has produced such British classics as Wolesley, Riley, Austin Seven, Morris Oxford and Morris Minor. Later came the famed Mini, the Rover 2000, the Metro and the latest flag-carrier, the Rover 800.
