Nanjing Buy MG Rover for £50m

On Friday PWC, the administrators for MG Rover announced that a deal had been struck with Nanjing Automotive of China to buy the assets of MG Rover Group.

 

However the Rover 75 could be at the centre of a legal tussle, according to the BBC due to Property Rights sold to SAIC towards the end of 2004, although its unclear just what rights were sold. The sale to Nanjing comes as a blow for UK businessman David James, who has put in two bids to buy parts of Rover. Earlier this week Mr James, the company-recovery specialist who helped revive the Millennium Dome, told the BBC the combined value of his bid would be about £40m.

Car and engine assets

State-owned Nanjing, China's oldest carmaker, and independent Shanghai Automotive Industries Corp (SAIC) had already put in bids.  Administrators PricewaterhouseCoopers (PWC) have been looking to sell off remaining MG Rover group's assets since it collapsed in April.  PWC had earlier confirmed that Nanjing plans to acquire all of the car and engine production assets of both MG Rover and its engine firm Powertrain. Nanjing had been close to a winning bid last Friday but SAIC then came back with another offer, and Mr James put in his offers this week.

Production plans

Nanjing has said it wants to restart car production in the West Midlands, but may look to use other sites in the region too.  Its job hiring plans are unclear, but the TGWU has expressed fears the Chinese company may not maintain substantial production in the UK.  Nanjing has said it plans to use MG as its main marque in Europe while developing other MG Rover brands, such as Austin, elsewhere.

It has also said it hopes to shift production of small and medium-sized cars to China, and then export kits to the UK for final assembly.

However the successful Nanjing bid could start a prolonged legal battle.

SAIC bought the intellectual property rights for the Rover 25 and 75 models during a previous attempt to take over the carmaker.  Nanjing had previously rejected any claims that SAIC's ownership of the rights to the Rover 25 and 75 engines would affect its plans.  And more recently Honda has repossessed equipment and blueprints, making it more difficult for any buyer to restart production of the Rover 45 - based on the Honda Civic - or MG ZS models.

In the days after the agreed sale however, the situation has become cloudy. Within hours of signing the deal, Nanjing has reportedly approached the other unsuccessful bidders offering to sell them part or all of the assets it bought, fueling speculation that not only did they not expect to win, they haven't got the money to complete the deal.

 

In addition is has come to light that another, more substantial bid may well have been ignored by PWC. Martyn Moseley, the Birmingham based transport tycoon reportedly offered around £90m in cash, with no conditions for the company but was given just 36 hours to produce the money. Nanjing on the other hand appear to have been sold the company with just a credit note from a bank for their deposit.

 

MG Rover seems to attract controversy and it shows no signs of stopping any time soon.