LONDON - The future of Rolls-Royce Motors Ltd. is not much clearer now than it was four weeks ago, when Vickers PLC agreed to start exclusive negotiations with BMW AG.
On Wednesday, April 29, Vickers management concluded a £340 million ($550 million) sale to BMW. Vickers said a shareholder meeting will be held at the beginning of June to consider approving the sale of Rolls-Royce to BMW, and the deal could be completed by July.
But the challenge from Volkswagen AG is very much alive.
'We are giving a lot of thought to the situation because we really do want to win this race,' said VW spokesman Kurt Rippholz. 'Rolls-Royce has our full concentration right now.'
On April 25, Volkswagen's board authorized Chairman Ferdinand Piech to spend $970 million for Rolls-Royce and Cosworth Engineering, an engine company.
'We will raise the stakes, and it will be for shareholders to make the choice,' said Rippholz. 'We hope they will accept what we offer.'
BMW is clearly happy with the status quo.
BMW Chairman Bernd Pischetsrieder said BMW saw no need to increase its bid.
'Looking at history, it has never happened that the stockholders voted against the decision of the Vickers management,' said Pischestrieder.
Small stockholders at Vickers' annual meeting in London April 29 were upset that Vickers was selling Rolls-Royce at all. 'This is dreadful,' said one. 'Rolls-Royce is part of our heritage.'
But big stockholders - institutions such as pension funds - will want the best price. Vickers said it will return about $319 million from BMW to stockholders directly. A higher bid from Volkswagen will appeal to them.
Investment funds are the largest stockholders. According to Citywatch, a financial information company in London, the largest stockholders are Capital Group (7.2 percent), Franklin Resources/Templeton (6 percent) and Perpetual Holding (4.5 percent). The first two are based in the United States.
'Our strategy is clear,' said VW's Rippholz. 'Of the 20 major automakers in the world at present, only 12 will remain in 15 years' time. To meet the challenge of highly competitive markets and overcapacity, you need a full product range.
'VW intends to have a full offer, and we will be in the luxury segment with or without Rolls-Royce. But if we can buy Rolls-Royce, we will get there quicker.'
In 1997, Rolls-Royce and Bentley posted sales of approximately $503 million and a profit before interest of about $44 million.
Vickers said the Specialist Engines and Pressings businesses, previously operated as part of Rolls-Royce Motors, are not included in the sale, and will continue to be owned by Vickers.
At Rolls-Royce headquarters in Crewe, United Kingdom, Managing Director Graham Morris feels beleaguered.
'We never expected this issue to drag on for such a long time, and it is starting to have an effect on our work,' he said. 'Sales are still holding, but the question of ownership emerges every time a decision is needed. People get to feel unsure, and you wonder if a decision is absolutely right. We just want the new owner to walk in and take control.'
United Press International contributed to this report