LONDON - In a surprise announcement last Thursday, May 7, just hours after the DaimlerChrysler AG press conference, Vickers PLC said it would ask shareholders to sell Rolls-Royce Motor Cars Ltd. to Volkswagen AG instead of to BMW AG.
Vickers Chairman Colin Chandler said: 'Through-out the Rolls-Royce Motor Cars sale process, we have focused on achieving the maximum value for our shareholders, and this remains the case.
'I am confident as to the strong prospects for Rolls-Royce Motor Cars under the ownership either of BMW or VW.'
The matter will be voted on by Vickers shareholders June 4. If BMW withdraws its offer, stockholders would have only the VW bid to consider.
Volkswagen is offering $710 million cash - $150 million more than the BMW offer that Vickers accepted on March 30.
According to Volkswagen sources, VW bid $445 million on March 24. Two days later, BMW bid $560 million.
Volkswagen then offered $625 million, but Vickers chose the BMW bid because of its overall nature, including a promise to invest $1 billion over 10 years and to keep a British management team. The latest VW bid included a British management team.
BMW's management board is scheduled to meet May 12 to consider its options.
'We are relaxed,' said BMW spokesman Richard Gaul. BMW said there would be no comment on the steps under consideration, but the company said it was sticking to its bid and its promise to stop delivery of engines to Rolls-Royce if a competitor buys it.
The Vickers announcement was a surprise, even though Volkswagen had said it would make a higher bid.
'It has taken us completely by surprise,' a senior Rolls-Royce official said.
Cosworth could be involved in continuing negotiations.
The Volkswagen bid did not include Cosworth, Vickers' engineering subsidiary. The Vickers statement announcing the proposed VW deal said: 'VW has advised Vickers that it would be VW's preference to source engines for Rolls-Royce Motor Cars from within Britain.
'Vickers and VW intend to review how the relationship between Rolls-Royce and Cosworth should best be continued in the future.'
The VW purchase price of $710 million values Rolls free of net debts. It is based on operating assets of approximately $246 million.