Rival bids for the bones of bankrupt MG Rover attracted considerable coverage in UK newspapers over the weekend and on Monday.
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A Monday morning report in The Times said a bid for all of the MG Rover group would be made at noon today by Shanghai Automotive Industry Corporation (SAIC) and Martin Leach, the former Ford Europe boss.
During the weekend, the Birmingham Post said the bid had turned the heat up on union leader Tony Woodley, who has publicly backed SAIC and Leach.
And the Sunday Telegraph, meanwhile, said competing bidder Nanjing Auto had designed a new range of cars to build in Birmingham if it wins the contest.
The Times said the SAIC/Leach bid is expected to be worth up to £60 million and is fully funded by SAIC, in a change from the business plan that was agreed between the two last week.
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By GlobalDataOriginally, Magma, the company controlled by Leach and Ed Sabisky, a former finance director of Vauxhall, was going to bid for MG Rover and be supported by SAIC, but it is thought that SAIC has agreed to take on all of the initial funding because of time pressure from the administrator PricewaterhouseCoopers (PwC), the paper noted.
People close to the talks reportedly believe that PwC wants to make a decision in the next few days.
The Times added that, David James, a company recovery specialist, is asking for more time to try to raise cash to make a bid – his initiative, called Project Kimber, has been primarily interested in the MG TF sports car, but is trying to buy the whole group.
James reportedly has asked the Department of Trade and Industry for at least £40 million and last week he also asked SAIC to form a joint venture – it is thought, however, that any financial help from the UK government would come further down the line in the form of regional development assistance.
According to the Birmingham Post, supporters of Project Kimber have claimed the SAIC/Leach consortium supported by Transport and General Workers Union union general secretary Woodley was likely to go “belly-up” within a few years.
Woodley, general secretary of the TGWU, last week firmly aligned himself to SAIC and Leach.
The paper said his stance has provoked harsh criticism from those backing the claims of Project Kimber.
A source told the Post: “I am sure his heart is in the right place but he ought to be looking after his members and not trying to be a businessman.”
He reportedly acknowledged that SAIC manufactured a million vehicles a year in China, and was the country’s biggest operator, but said it was done as part of joint ventures with Volkswagen and General Motors, with Germans and Americans effectively running the operations.
He told the Post that, if Woodley again turned power broker [as he did when Phoenix Venture Holdings fought off a rival to buy MG Rover from BMW in 2000] and SAIC emerged victorious “then my forecast is that 12 months before the next general election it will go belly up again”.
The SAIC plan was simply “not credible”, the source insisted to the Birmingham Post.
The source reportedly discounted the hopes of a second Chinese automaker Nanjing, which some believe is the favourite because it is said to have the funds up front.
According to the Post, the Project Kimber team claim they are fully funded and have enough working capital, but are waiting to see if the Department of Trade and Industry is prepared to give the loan guarantee its investors are demanding.
However, another of the paper’s sources poured scorn on the claims, accusing the Project Kimber team of sour grapes.
He said: “David James’ bid is dead in the water and the only way he can get out of the water is to diminish everyone else and say their plans are not going to work.”
The Birmingham Post said it understood that under the SAIC bid there would be a shift of parts of the Longbridge business to the Far East, probably the Powertrain engine making facility.
Engines would be completed in China and then shipped back to the UK where production of the cars would take place.
A spokesman for the TGWU also dismissed the claims, saying there remained a business logic to a link between Rover and SAIC, while Leach was a highly respected and able motor industry figure, the Post said.
“SAIC are nobody’s fools and although Tony Woodley is not a businessman, he is someone with decades of experience of the car industry and knows a good deal when he sees one.
“The SAIC-Magma offer is the best possible deal. The David James bid seems to be based on the government giving money, which they are not going to do, and it’s Tony Woodley’s view that the Nanjing bid is more of a lift and shift operation.
“The SAIC and Magma offer is the best opportunity to revive production at Longbridge,” the spokesman told the Birmingham Post.
A source close to Nanjing reportedly maintained its bid was still the most financially sound offer, would keep the most jobs – 2,000 – and would retain research and development in the UK.
The Sunday Telegraph said Nanjing has designed a new range of MG Rover sports cars to be built at Longbridge if its £50 million bid for the failed manufacturer is successful this week.
“Nanjing’s strategy is to have a UK base with design, engineering and manufacturing here supporting a UK brand delivering high-value prestige products, ” an executive close to the Chinese state-owned manufacturer told the paper at the weekend.
He reportedly added: “Nanjing has a strong manufacturing heritage and it has partnered with Arup [a UK engineering group] and together they’ve developed a road map for exciting new vehicles to be designed, engineered and manufactured both in the UK and in China.”
Nanjing has lodged a bid with PricewaterhouseCoopers for the entire assets of the MG Rover group including Powertrain, the engines and transmissions business, the paper said.
According to the Sunday Telegraph, a sale to Nanjing could also see the revival of brands not seen in the UK for decades. “There are a number of brands within the MG Rover assets,” the executive said, “and the intention is for MG to be used in the UK and Europe with the potential for other brands to be used elsewhere around the world. In China, for example, the Austin brand has a very good reputation.”
If it succeeds, Nanjing is understood to be planning to transport some of the MG Rover production facilities to China where it will build small cars for the domestic market. Nanjing believes it can use the economies of scale generated through the high volumes of sales to the Chinese market to subsidise the export of parts for the small cars to be assembled in the UK.
“The plan is to re-start production of sports and luxury saloon cars at Longbridge and small and medium-sized cars would also be assembled in the West Midlands,” the executive told the Sunday Telegraph.
The paper added that he denied reports that Nanjing has not raised sufficient finance. The carmaker is owned by Jiangsu Province, one of the most economically active parts of China. “Backing is not a problem,” he said.
Administrators talk with three parties
