Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: TUESDAY, February 1, 1994 TAG: 9402010067
SECTION: BUSINESS PAGE: B-8 EDITION: METRO
SOURCE: Associated Press
DATELINE: LONDON LENGTH: Medium
The German automaker BMW agreed Monday to buy the Rover car company from British Aerospace for $1.2 billion, merging two of the biggest European auto names.
The automakers said they were creating the world's largest specialist car manufacturer, producing nearly 1 million vehicles a year that will include BMW's luxury cars as well as off-road Land Rovers.
"The Rover and BMW model ranges complement each other," BMW Chairman Bernd Pischetsrieder said. "In addition, our differing regional strengths provide a powerful synergy."
The deal cheered investors but angered Japanese car giant Honda, which owns 20 percent of Rover but had balked at increasing its stake to more than 50 percent when British Aerospace expressed a desire to sell out.
British Aerospace bought Rover five years ago from the British government on the belief that the companies' engineering capabilities would complement one another. These benefits were never as great as British Aerospace hoped.
BMW decided a buyout of Rover made more sense than trying to grow by expanding its auto business.
Rover is England's last mass producer of automobiles that was under British ownership; other big car plants in Britain are Japanese- or American-owned. Rover executives at the news conference with Pischetsrieder sought to play down any significance.
"The motor business is very much an international community these days," said George Simpson, chairman of the Rover Group. "It's very difficult to be efficient in our business, if you take a nationalistic approach to operating in that environment."
The deal left questions about Rover's future relationship with Honda.
BMW stands to acquire 100 percent of Rover Group Holdings Ltd. The Rover car business, owned 20 percent by Honda Motor Co. Ltd., is a subsidiary of the holding company.
Rover, meanwhile, holds 20 percent of Honda of the United Kingdom Manufacturing Ltd.
"We are not very happy with it," said Kiyoshi Ikemi, an adviser to Honda's president.
"We have been working with Rover for 15 years in a very friendly manner, and our aim is to maintain the Britishness of the company. We have not been successful because of the sale of the company to a German manufacturer," Ikemi told British Broadcasting Corp. television.
BMW said production would continue at all of Rover's facilities in Britain, and Pischetsrieder said he hopes for increased production. A Rover spokesman said employees had been given assurances that no jobs would be lost.
Last year, Rover reported a loss of $13.5 million, after interest and tax payments, on sales of $6.45 billion.
by CNB