Thousands of Rover workers in Britain celebrated yesterday's successful bid by the Phoenix consortium to buy the Longbridge car plant from BMW, in a deal that saw the union-backed group purchase the plant for a nominal £10 sterling.
Phoenix received about £500 million sterling from the German car firm in repayable credits to cover the cost of restructuring, including redundancy payments and another £200 million sterling from the US bank First Union to finance a new programme of car construction at Longbridge after seven days of intense negotiations.
The British Prime Minister, Mr Tony Blair, took time out from a speech to magazine publishers in London to praise the Rover deal and the role of the Trade and Industry Secretary, Mr Steven Byers, in helping to secure it. There were calls for Mr Byers's resignation in the wake of the crisis at Longbridge with critics accusing him of dragging his feet and being slow to learn about the key issues.
"Now there is still going to be a lot of difficulties going over the next few months and years, but at least it is a real start to the process of giving Longbridge a decent future," Mr Blair said.
With the head of the Phoenix consortium and a former Rover chief executive, Mr John Towers, predicting job losses should amount to fewer than 1,000 out of a workforce of 9,000, employees at Longbridge were jubilant but realistic at the news that Phoenix was taking over the plant. Mr Dave Gibbs, a test worker from Rednal, Birmingham, said he heard the news that BMW was selling the plant to Phoenix on the radio. "It was a surprise. Let's hope it's going to be better," he said. "There's going to be job losses and that's going to be a shame, but it's a better deal than Alchemy Partners. This is the best deal we have at the moment."
BMW's deal with Phoenix was reached late on Monday night, less than two weeks after a plan to sell Rover to the Alchemy venture capital group collapsed amid disagreement over who should finance redundancy payments.
Phoenix will take over production of the Rover 25 and 45, the MGF sports car and the Mini at the Longbridge plant near Birmingham with immediate effect. Production of the Rover 75 will move to Longbridge from a plant at Oxford, which has not been sold to Phoenix.
"After intense negotiations, we have managed to find a buyer for Rover whose aim is to continue to run Rover and who will therefore prevent the loss of thousands of jobs in the Rover plant in Birmingham, in the supplier industry and in the retail business," BMW's chief executive, Prof Joachim Milberg, said yesterday.
Shares in BMW rose to their highest level for almost two years following yesterday's announcement but fell soon afterwards, as analysts predicted that BMW was unlikely to recoup its £500 million in credits to Phoenix.
Phoenix has not released details of its business plan for Rover but it has indicated that it wants to produce between 150,000 and 200,000 cars a year. The consortium also hopes to form a joint venture with a major car manufacturer in two or three years.
BMW executives made no secret of their relief at being rid of Rover, which has been losing £2 million sterling a day. Industry analysts said yesterday that the Phoenix deal was preferable to closing Rover, a move that would have caused serious damage to BMW's image.
"The Rover chapter is certainly over now. BMW will concentrate on the BMW marque from now on," said Mr Frank Biller, an analyst at the Bank of Baden-Wuerttemburg.
Despite yesterday's deal, rumours persist about Prof Milberg's future as BMW's chief executive, with some observers predicting that he will be sacked by July. But a BMW spokesman insisted yesterday that Prof Milberg's job was secure and that he had the full backing of the company's board and shareholders.
