Sun, Jul 24, 2005 - Page 11 News List

Nanjing Automobile buys MG Rover

PRODUCTION The Chinese firm reportedly bought the UK's last major automaker for US$87 million, a move that raised questions about the future of British workers


Administrators for MG Rover Group Ltd have said that the collapsed British automaker has been bought by Chinese carmaker Nanjing Automobile (Group) Corp (南京汽車).

The announcement on Friday ended months of speculation about the future of Rover, the UK's last major automaker, but also raised questions about how much production Nanjing would retain in the UK -- and how many jobs would be involved.

PricewaterhouseCoopers, which took over administration of Rover when the automaker filed for bankruptcy in April, said Nanjing had bought the assets of both MG Rover Group and its engine-producing subsidiary, Powertrain Ltd.

The terms were not disclosed. A person close to the deal, however, said Nanjing paid just over ?50 million (US$87 million).

Nanjing had faced two competitors in its bid to buy Rover's assets -- a similar offer from China's state-owned Shanghai Automotive Industry Corp (SAIC, 上海汽車工業), which prompted the company's collapse earlier this year when it pulled out of talks about a merger, and an offer by British businessman David James to buy two parts of the company.

Tony Lomas, joint administrator at PwC, said in a statement that the "level and conditionality of SAIC's bid left Nanjing's bid as the preferred way forward."

Unions had supported the SAIC deal because they believed it was the most likely to restart substantial production at Rover's Longbridge plant in central England, which was forced to close with the loss of 6,000 jobs when the company collapsed.

"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," said Tony Woodley, general secretary of the Transport and General Workers Union.

"It's disappointing, therefore, that the administrators have not seen fit to allow SAIC to complete its bidding process," he said.

Woodley said the union will now seek talks with Nanjing to discuss jobs.

Lomas said Nanjing plans to begin hiring staff to implement its plan for the company, which includes relocating the engine plant and some of the car production to China, while retaining some production in the UK. It also plans to develop a research and development and technical facility here.

Rover had hoped the earlier deal with SAIC would generate cash to allow it to introduce new models and stem the falling sales of its current makes. The company, which turned out 40 percent of the cars bought in the UK in the 1960s, had not produced a new model since 1998 and held only a 3 percent share of the market at the time of its collapse.

The British government plowed millions of pounds in emergency loans into the company to keep it operating for a short time as its bankruptcy provided an embarrassing backdrop to the ruling Labour Party's election campaign, which was centered on the strength of the British economy.

PwC ended those loans and closed the factory when the prospects of a bidder for the entire group appeared to vanish.

Some intellectual property rights for Rover models were sold to SAIC in a ?67 million deal last year, but the Chinese company does not hold the rights to produce the cars in Asia.

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