European More Political Wrangling Over U.K.’s Rover –

Although BMW’s disposal of Rover has become a massive political football, Alchemy Partners this month said its acquisition of the Longbridge Rover plant from BMW was close to completion.

However, although Alchemy has negotiated an exclusivity clause with BMW, a rival bid has emerged, headed by John Towers, a former managing director of Rover, and supported by both the motor manufacturing unions and reportedly a consortium of Rover dealerships, although the financial nuts and bolts of the Towers bid have not been specified. The credibility of press reports suggesting that Towers’ bid has also secured backing from U.K. private equity groups is questionable, since a number of informed industry sources profess ignorance of any such participation. Indeed, given that the Towers bid is predicated on continuing volume vehicle production at Longbridge (and thus saving jobs) and that a union representative interviewed on national TV said that overcoming consumer resistance to the Rover brand would be one of the immediate tasks facing the company were Towers’ bid to succeed it is hard to imagine what the attractions of any such bid might be for a private equity firm.

A regeneration taskforce involving the Department of Trade & Industry, manufacturing unions and local authority bodies is examining options for the future of the Longbridge plant. Alchemy at press time announced that it had withdrawn from negotiations with the task force because of a conflict of interest posed by taskforce chairman Alex Stevenson’s brother’s involvement with the Towers consortium bid.

An early resolution of the issue is clearly in the interest of all parties, save the unspecified proportion of the workforce slated for redundancy if Alchemy’s deal completes: Rover is currently selling cars at discounts of more than 10% and, Alchemy founder Jon Moulton said, “Every day makes it worse for Rover.”

If BMW, which is already writing off more than GBP2 billion to rid itself of Rover, were to bow to political pressure and opt for an alternative disposal plan, the exclusivity clause with Alchemy could cost it even dearer.