Two disgruntled unsuccessful bidders appear to be plotting ways to unsettle Nanjing Automobile’s successful Friday night agreement to acquire MG Rover, according to newspaper reports.
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The Daily Telegraph said MG Rover was sold to Nanjing in a deal that will see 2,000 jobs return to the shuttered factory at Longbridge, southwest Birmingham.
Losing bidder Shanghai Automotive (SAIC) was reported to have claimed its bid was superior and to be planning legal action while UK corporate troubleshooter David James was said to be submitting a bid on Monday after criticising MG Rover administrator PricewaterhouseCoopers for selecting Nanjing while he was still finalising his offer.
According to the Daily Telegraph, Nanjing said it plans to build sport cars under the MG marque in the UK, while moving Rover production to China, along with engine production.
Another newspaper report at the weekend said the Rover cars would be sold in China under the Austin brand, and as MGs elsewhere.
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By GlobalDataThe purchase of Rover, together with MG and Powertrain, the engine business, was in a deal thought to be worth between £50 million and £60 million, the paper said.
A research and development centre will be built at Longbridge. “Clearly the Chinese know that the British are excellent at research and engineering,” Alan Belfield at Arup, Nanjing’s partner, told the Telegraph.
He reportedly said he could not reveal precisely how much the deal is worth, because of a confidentiality agreement with the administrator.
A spokesman for Price Waterhouse Coopers told the Daily Telegraph the Nanjing bid was “significantly higher than the other offer, and it was also unconditional. SAIC had attached a number of conditions and in the end, that is what drove the administrator to choose Nanjing”.
Tony Lomas, the joint administrator at PWC, reportedly said: “Until last week, SAIC had offered to acquire only the Powertrain assets. On Monday of this week, SAIC submitted a conditional bid for all of the MG Rover and Powertrain assets. However, the level and conditionality of SAIC’s bid left Nanjing’s bid as the preferred way.”
Tony Woodley, general secretary of the Transport and General Workers Union told the Daily Telegraph: “Having viewed both the Nanjing and SAIC bids, there is no doubt in our mind that on first viewing the SAIC proposals appeared to suggest more jobs for Britain. It’s disappointing therefore that the administrators have not seen fit to allow SAIC to complete its bidding process.” He said he now wished to make urgent contact with Nanjing over its plans for Longbridge.
Nanjing, China’s oldest carmaker, reportedly said it wanted to become a “significant global player”, and the acquisition of Rover would give it an entry into Europe. The company also has a joint venture with Fiat, which is underperforming.
Nanjing, which has 16,000 workers, is far smaller than SAIC, which made 600,000 vehicles last year, the Daily Telegraph noted.
The paper added that one complication is that SAIC already owns the intellectual property rights to the engines for the Rover 25 and 75 models – a spokesman for the administrator said that he had “sold any rights that the company had” and that these were substantial.
However, according to the Daily Telegraph, it is expected that Nanjing and SAIC will now negotiate a deal between them – SAIC is thought to be primarily interested in acquiring Powertrain.
On Monday, the paper said that SAIC had accused Price Waterhouse Coopers of discriminating against its offer.
An SAIC spokesman reportedly said the company was disappointed at losing out and insisted its bid was superior to Nanjing’s: “The process has not been handled fairly or in the best interests of creditors and employees. Our offer gave a firm guarantee of substantial employment at Longbridge.”
SAIC is considering the possibility of legal action, the Daily Telegraph noted.
Union secretary Woodley reportedly backed SAIC, saying the administrators should have given it more time and that a “fantastic opportunity” could have been lost.
Nanjing will press ahead with its business plan, which will include the manufacture of MG sports cars in the UK, the paper added.
Separately, the Independent newspaper said David James is refusing to give up the battle for MG Rover and was planning to submit a bid on Monday despite the fact that administrators agreed the sale to Nanjing on Friday.
According to the Independent, James is furious with the administrators for choosing Nanjing as the successful bidder on Friday night while he was still finalising his offer. Shortly before news of Nanjing’s success in the auction emerged on Friday, Robert Tchenguiz, the property entrepreneur who was providing backing to James’s bid, had told the administrators that he would attend a meeting with them in person on Monday to provide reassurance over his financial support.
James reportedly said the administrators should have waited to look at his offer, which he believes is “substantially higher” than Nanjing’s. “We told them we were coming back on Monday with our offer and we were very shocked by Friday’s announcement. We are putting in our bid regardless,” he told the Independent.
He is submitting a bid valued at £65 million, with his team taking on the MG sports car brand and selling the rest within six months.
A PricewaterhouseCoopers spokeswoman told the paper: “As far as the administrators are concerned, bidders had more than three months to make an offer. The administrators decided on the best deal available for creditors and the sale has now been completed.”
The Independent said any legal wranglings between Nanjing and SAIC over rights to the Rover brands will have to be decided between the two parties – Nanjing does not believe problems arise from the rights SAIC owns, saying they are not exclusive where Rover’s production assets are also used to produce MG cars. SAIC may approach Nanjing to buy some of Rover’s assets, such as the Powertrain engine business, to soothe its concerns, the report added.
The Independent noted that the successful Nanjing team also has to win union support. Representatives of the GMB, the T&G and Amicus reportedly are meeting with them on Tuesday to discuss the offer in terms of jobs and resurrection of production at the Longbridge site.
The unions are not yet convinced that Nanjing will create a lasting centre in the UK, the paper said.
The Independent added that Martin Leach, the former head of Ford Europe, who teamed up with SAIC to launch a joint bid, has bowed out of pursuing Rover following the sale to Nanjing.
Leach told the paper: “I am naturally disappointed. I believe we put in a credible bid backed up by a sustainable business plan that would have been highly beneficial for the UK. We will watch developments with great interest and, in the meantime, will continue with our search for underperforming businesses in the automotive sector.”
