BMW will close Rover Cars putting tens of thousands of British car workers out of work unless it finds an alternative buyer for the group within a month, the Bavarian car manufacturer warned yesterday. BMW's warning came after the surprise withdrawal yesterday morning of the venture capitalists Alchemy Partners from talks to buy Rover Cars.
The collapse of the talks, apparently over who should pay for redundancies at Rover's loss-making plant at Longbridge, near Birmingham, was greeted with delight by Rover's British employees. It leaves the Phoenix consortium, led by former Rover manager Mr John Towers, as the only group with a bid on the table for the ailing car group.
The Phoenix bid has the support of the British government, which greeted the withdrawal of Alchemy with relief. But BMW has never treated the Phoenix offer seriously and publicly dismissed it this week as unrealistic.
In a statement following the collapse of the talks with Alchemy, BMW said it would now pursue alternative routes to bring to an end its involvement with Rover Cars.
"These routes include the sale of Rover Car operations or its closure. A decision on which of those alternatives will be implemented will be taken during the course of next month," the statement said.
BMW shares fell after the news of the deal's failure was announced and ended the day in Frankfurt down 2 per cent. Analysts described Alchemy's withdrawal as a catastrophe for BMW that raised questions over the future of the car maker's chief executive, Prof Joachim Milberg.
Prof Milberg was heavily criticised for his handling of BMW's withdrawal from Rover but until now, the Quandt family, which owns almost half the shares in BMW, has stood behind the chief executive. The family remained silent yesterday but analysts predicted yesterday that Prof Milberg could pay the price for the debacle, which continues to bleed cash from the car manufacturers.
"The collapse of negotiations with Alchemy will certainly not improve Milberg's standing in the company," one motor industry analyst said yesterday.
Three members of BMW's board resigned because they opposed the Alchemy deal and many industry observers believe that their departure will now be avenged by the sacking of Prof Milberg.
BMW said yesterday that, despite its earlier dismissal of the Phoenix offer, it was ready to resume talks with the British consortium.
The Phoenix offer is popular with the British government and unions because it promises to save more jobs by maintaining high volume car production at Longbridge. Phoenix would make between 1000 and 2000 of Longbridge's 9000 workers redundant - less than half the number of jobs threatened by Alchemy's plan.
The problem with the Phoenix plan is that, to make a profit from high-volume production, Rover would have to produce cars that people want to buy - something the British group has signally failed to do in recent years.
German analysts were sceptical yesterday about Phoenix's chances of turning Rover around.
