VW Seen Winning Rolls Royce Vote
Jun. 04, 1998
LONDON (AP) _ Volkswagen AG has formidable support for its bid to buy Rolls-Royce Motor Cars Ltd., but Rolls-Royce's parent company conceded Thursday it would be open to late offers intended to keep the fabled luxury carmaker British.
Shareholders at Vickers PLC, the engineering group that owns Rolls-Royce, were set to vote on the sale at a special meeting tomorrow _ and the result may be a foregone conclusion.
The five biggest institutional investors controlling 42.3 percent of the votes have either hinted or declared openly that they favor Volkswagen's bid of 430 million pounds ($700 million), a source familiar with the deal told The Associated Press on condition of anonymity.
The fourth biggest stakeholder, SLC Asset Management, said its 3.6 percent of the votes are going to Volkswagen.
``We voted in the best interests of our investors and as a result voted for Volkswagen,'' said Steve Russell, the United Kingdom equities director at SLC, which is owned by Sun Life of Canada.
But Vickers probably can expect an earful from smaller investors, many of whom think it is their patriotic duty to keep Rolls-Royce, the very epitome of hand-crafted British luxury, from falling under foreign control.
Two groups of Rolls-Royce enthusiasts claimed Thursday they were still trying to put together bids.
``The goal is to keep Rolls-Royce motors as a British-owned company, producing Rolls-Royce and Bentley motor cars in the Crewe (England) factory with the existing brilliant work force,'' said Donald Longmore, a doctor involved in one of the efforts.
The Rolls lovers gained a concession when the Vickers chairman, Sir Colin Chandler, told them in a meeting early Thursday they could submit bids even after the shareholders have their say.
But Chandler added that Vickers will not entertain any late offers that could not be finalized as quickly as the Volkswagen deal, which Vickers hopes to close by July 3.
Volkswagen accelerated its plans to buy Rolls-Royce early Thursday when it agreed to also purchase a high-performance engine company called Cosworth for 120 million pounds ($196 million) as part of the deal.
Cosworth makes some of the engines for Rolls-Royce. But the acquisition would only be a partial solution if Volkswagen's rival, German carmaker BMW, makes good on a threat to cut off supplying engines for Rolls-Royce after any sale of the company to VW.
BMW had agreed earlier to purchase Rolls-Royce for 340 million pounds ($554 million) and says it won't change the offer, which shareholders also must consider.
A Vickers spokesman, Neil Hayes, sought to play down the significance of BMW's threat, although he acknowledged that the Cosworth engines would be only a ``resource'' rather than a full solution if the BMW engines are taken away from Rolls-Royce.
The deal with Volkswagen might face further difficulties from Rolls-Royce PLC, the jet engine maker that was separated from Rolls-Royce Motor Cars in an early 1970s financial restructuring, but still controls the rights to the brand name and the logo.
Rolls-Royce, the engine maker, has backed the bid from BMW, which happens to be its partner in a jet engine venture.
Rolls-Royce has had no discussions on the use of the brand name with Volkswagen, and it refused this week to say whether it might try to block or delay the VW deal.
Vickers, an engineering group based in London, said last year it would sell Rolls-Royce cars as part of its strategy of focusing on other business, including defense. Selling Cosworth engines would further that strategy, Chandler said Thursday.