Blog: SAIC-Rover 'continuing negotiations'
Dave Leggett | 6 April 2005
What on earth is going on with the protracted tripartite MG Rover, DTI (British government) and SAIC talks in Shanghai? This deal, remember, was supposedly 'imminent' for signing months ago. We heard this morning from a pretty good source that the SAIC side walked out late last night, having finally had enough of the protracted negotiations. Sounds plausible and our source is a reliable one, though we cannot get confirmation of the walkout.
SAIC has been hearing more lately about the dreadful state of MG Rover's finances and they must be worried that the costs of the deal to them are stacking up pretty badly in terms of potential liabilities (like redundancies and pension fund). The mere fact that the company needs a sizeable bridging loan from the government to stay in business in the short-term sends out a pretty bad message. And there are perhaps other ways to break into the European market. How much value would they put on the Rover brands anyway? This week the scales have apparently been tipping further the wrong way.
So, if SAIC walked last night, where are we today? Well, first off, Rover won't be admitting anything while there is any chance that the negotiations could 'continue'. (Remember how they kept saying Brilliance was okay when it clearly wasn't?) Towers is avoiding saying anything about the state of the talks right now. And what does 'continue' actually mean? Well, I don't know, but today it may have come down to pleading with SAIC to come back to the table and offering more sweeteners, if there are any.
Maybe the SAIC side left purely as a negotiating tactic, but they are clearly in the driving seat. It's the last chance for Rover. And the government does not want the saga of Longbridge crisis/closure during a General Election campaign. This story has a political edge to it also, but the emergence of the state of MG Rover's finances (government shock, horror!) and the consequential need for a bridging loan over the weekend looked inept and can't have helped the chances of the deal happening.
The British side will likely not admit it is over until there is absolutely 0% chance of a deal with SAIC. It could be another 24 hours before we know for certain what is going on. Not over till the fat lady sings, but she could be singing tomorrow if SAIC really has had enough and does not want to talk any more.
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