Found this on the Time Website:-
http://www.timesonline.co.uk/article/0,,5-677422,00.html
Rover in talks to sell key stake to outside investor
By Christine Buckley, Industrial Editor
MG ROVER is in talks to sell a key stake in the business to an outside investor as part of a deal to bolster car production at its Longbridge factory.
It is believed the company, which was bought from BMW by a consortium of businessmen three years ago, is looking at an alliance that could lead to a significant increase in production and the creation of up to 1,000 jobs.
It is understood that the talks may not involve another carmaker but could instead centre on a large business with an interest in the car industry, such as a leasing company. Discussions have involved a number of senior MG Rover officials, including John Towers, chairman.
The deal could help to stem a substantial fall in sales across Europe, particularly if the carmaker can exploit regions in which it is currently weak.
The increase in production would involve existing Rover and MG models, as well as the carmaker’s new mid-sized car, due to be launched next year.
It is thought that the company is particularly keen to expand in Eastern Europe and the US. The group has been attempting to take over a plant in Poland formerly owned by Daewoo, the Korean carmaker that was rescued from bankruptcy by General Motors, with the intention of establishing a new plant to manufacture Rover 45s. However, negotiations with the Polish Government and creditors have proved difficult and have stalled. The Rover 45 would have been made in Poland using equipment that will be made redundant when a new medium-sized car — the replacement for the 45 — begins production. MG Rover believes the Eastern European market is not as sensitive to ageing models as the Western European and US markets.
An escalation in production at Longbridge would also include the larger 75 model.
This could suggest that some cars may be destined for the American market, where fuel costs are lower and large cars are popular.
MG Rover has previously ruled out selling a stake in the business, which is partly owned by its employees, but it is thought that the new talks hinge on the partner taking a strategic stake in the group. However, the carmaker would be under pressure not to allow its directors to benefit from the deal after recent controversy over rises in executive pay.
MG Rover became an independent carmarker in May 2000 after BMW decided to dispose of its only overseas car subsidiary. The German manufacturer’s initial plans to sell Rover to a venture capital group met with huge opposition from unions and politicians, who objected to plans to scale down production to a small number of MG models. BMW eventually agreed to hand the company over to Mr Towers’s consortium, whose rescue plan was dependent on maintaining volume production. However, MG Rover has so far fallen short of its production and profitability targets.
An alliance is crucial to the business’s long-term survival because a small independent company cannot afford the large development costs of new models. Its new medium-sized car is based on the platform of the 75, but such an engineering adaptation is not possible for a new small car to replace the Rover 25.
http://www.timesonline.co.uk/article/0,,5-677422,00.html
Rover in talks to sell key stake to outside investor
By Christine Buckley, Industrial Editor
MG ROVER is in talks to sell a key stake in the business to an outside investor as part of a deal to bolster car production at its Longbridge factory.
It is believed the company, which was bought from BMW by a consortium of businessmen three years ago, is looking at an alliance that could lead to a significant increase in production and the creation of up to 1,000 jobs.
It is understood that the talks may not involve another carmaker but could instead centre on a large business with an interest in the car industry, such as a leasing company. Discussions have involved a number of senior MG Rover officials, including John Towers, chairman.
The deal could help to stem a substantial fall in sales across Europe, particularly if the carmaker can exploit regions in which it is currently weak.
The increase in production would involve existing Rover and MG models, as well as the carmaker’s new mid-sized car, due to be launched next year.
It is thought that the company is particularly keen to expand in Eastern Europe and the US. The group has been attempting to take over a plant in Poland formerly owned by Daewoo, the Korean carmaker that was rescued from bankruptcy by General Motors, with the intention of establishing a new plant to manufacture Rover 45s. However, negotiations with the Polish Government and creditors have proved difficult and have stalled. The Rover 45 would have been made in Poland using equipment that will be made redundant when a new medium-sized car — the replacement for the 45 — begins production. MG Rover believes the Eastern European market is not as sensitive to ageing models as the Western European and US markets.
An escalation in production at Longbridge would also include the larger 75 model.
This could suggest that some cars may be destined for the American market, where fuel costs are lower and large cars are popular.
MG Rover has previously ruled out selling a stake in the business, which is partly owned by its employees, but it is thought that the new talks hinge on the partner taking a strategic stake in the group. However, the carmaker would be under pressure not to allow its directors to benefit from the deal after recent controversy over rises in executive pay.
MG Rover became an independent carmarker in May 2000 after BMW decided to dispose of its only overseas car subsidiary. The German manufacturer’s initial plans to sell Rover to a venture capital group met with huge opposition from unions and politicians, who objected to plans to scale down production to a small number of MG models. BMW eventually agreed to hand the company over to Mr Towers’s consortium, whose rescue plan was dependent on maintaining volume production. However, MG Rover has so far fallen short of its production and profitability targets.
An alliance is crucial to the business’s long-term survival because a small independent company cannot afford the large development costs of new models. Its new medium-sized car is based on the platform of the 75, but such an engineering adaptation is not possible for a new small car to replace the Rover 25.
