Brits’ Stiff Upper Lip Quivers as Rolls-Royce Sale Is OKd

The realities of global commerce caught up with a grand remnant of British glory Friday as German auto maker Volkswagen won approval to buy Rolls-Royce Motor Cars, infuriating small English investors.

“Should I call it now a Rolls-wagen?” incredulous shareholder Rodney Crowe asked at a meeting called by Vickers, the engineering group that is selling Rolls-Royce to the Germans.

Shareholders approved Volkswagen’s $700-million deal over a $554-million offer from rival BMW, in a raucous session punctuated by outbursts of nationalism.

“What are we going to have? A flying lady on the front of the Beetle?” Crowe said later, conjuring up an image of the distinctive Rolls-Royce hood ornament perched on a Volkswagen Bug.

Vickers, an engineering group almost thrown out of business by Rolls-Royce’s losses in the last recession, said the sale was the best way forward.

Rolls-Royce is financially healthy now, but Vickers Chairman Colin Chandler said it needs a strong owner with automotive expertise to steer through an increasingly globalized and highly competitive industry.

Volkswagen, the biggest car maker in Europe, is an ideal match, he said.

Volkswagen spokesman Klaus Kocks said the company was pleased by the outcome but had no further comment because the deal is not expected to close until sometime in July.

Rolls-Royce managers had considered a buyout, one of many proposals to keep Rolls-Royce British, but they could not afford enough capital investment to secure the company’s future.

“We would love to remain British, but we have to stay realistic,” Rolls-Royce Chairman Graham Morris said.

Volkswagen is driving to the top of the luxury car market by purchasing one of the great motoring traditions of the century. Rolls-Royce makes its Rolls-Royce and Bentley cars entirely by hand, selling them for prices that begin at around $250,000 each.

The very idea of Rolls-Royce going German had some investors sounding like they wanted to replay World War II.

“For God’s sake, try and take a broad view for the country,” said Desmond Lake, drawing cheers by referring to Volkswagen’s origins in Nazi Germany. Volkswagen was founded under Adolf Hitler’s guidance in the late 1930s and manufactured weapons during the war.

After getting an earful, Volkswagen now faces more hurdles.

The jilted suitor, BMW, said Friday it will terminate a contract for supplying some engines to Rolls-Royce. BMW wouldn’t say how long its engines will stay in the pipeline.

Volkswagen is addressing the matter by agreeing to buy the British auto engine maker Cosworth, also from Vickers, for $196 million.

Volkswagen might run into further difficulties with Rolls-Royce PLC, a separate company making jet engines. Rolls-Royce PLC controls the Rolls-Royce brand name and logo and favored a deal with BMW, its partner in an aerospace venture.

Rolls-Royce PLC wouldn’t say Friday if it will try to block Volkswagen’s use of the brand name.

Chandler, the Vickers chairman, said a 25-year-old contract allowing Rolls-Royce PLC to veto the purchase of Rolls-Royce Motor Cars by a foreign buyer is unenforceable under current European law.

“The trademark can’t go anywhere else,” Chandler said. “We exclusively own the radiator, the flying lady and Bentley.”

The takeover was delayed by a Rolls-Royce enthusiasts group called Crewe Motors, after the English town where Rolls-Royce is based. Lawyer Michael Shrimpton, who runs the group, claimed he was assembling an $815-million offer from mysterious private backers.

Shrimpton had already tried but failed to bid for Rolls-Royce. After the Vickers board adjourned the meeting to talk privately with Shrimpton, Chandler said the latest proposal had no substance.

“I think it’s a sad day,” lamented investor Rodney Timson. “Rolls-Royce represents British engineering excellence, and it won’t be ours after this. We’re losing the family silver, and the nation’s not bothered.”