The Rover Takeover: BMW pledge on Rover jobs - Fears eased after Germans buy last British-owned volume car maker for five times what BAe paid the state

THE GERMAN car manufacturer BMW yesterday averted a backlash over its pounds 800m purchase of Rover by pledging that the deal would not lead to any job cuts or plant closures in Britain.

Jittery ministers had feared that the sale to a foreign bidder of Britain's only remaining volume car manufacturer, for more than five times the pounds 150m British Aerospace paid the Government in 1988, would provoke an outcry.

But the upmarket German manufacturer promised that the jobs of Rover's 33,000 employees were safe, that it would invest at least pounds 250m a year in the company and that it might reintroduce some of the famous marques from Rover's past such as Austin Healey, Riley and the TR range of sports cars.

The takeover, negotiated in the strictest secrecy and expected to be completed in the next six weeks, will create a grouping with sales of just under one million cars a year and 104,000 employees.

The announcement came as Rover reported an operating profit of pounds 56m in 1993 on turnover of pounds 4.3bn, helped by a 10 per cent increase in worldwide sales to 440,000; Land Rover, the jewel in Rover's crown and one of the world's leading makers of 4x4 vehicles, sold a record 74,000 Discoveries, Range Rovers and Defenders.

BAe, which has lived with controversy since it emerged that its purchase of the car maker was accompanied by pounds 44m in secret 'sweeteners', described the deal as a 'historic occasion' which would bring Rover greater security.

However, the sale raises serious questions about Rover's relationship with Honda, which owns 20 per cent of the company and is widely seen as the driving force behind Rover's revival with the launch of the 200, 400, 600 and 800 model ranges.

Honda was given the option to buy the remaining 80 per cent but was not prepared to raise its shareholding above 50 per cent. BMW said it would honour all Rover's existing agreements with Honda and hoped the relationship would continue.

George Simpson, chairman of Rover and deputy chief executive of BAe, side-stepped suggestions that it had sold out to 'foreigners', saying it was difficult to be efficient if a business took a nationalistic approach. 'There will be increased UK production volumes, Rover's product range will be extended and the deal provides certainty about Rover's future ownership,' he said.

Ministers had been braced for a backlash over the deal but the protests yesterday by Opposition MPs in the Commons were muted. Ministers had feared that announcing the end to British-owned volume car production would plunge John Major into further difficulties.

'In our hearts it is sad, but in our heads, we know it is inevitable,' said Sir John Butcher, a former industry minister, summing up Tory backbench sentiment.

Most ministers use Rovers as a symbol of the Government's support for British manufacturing. The official ministerial cars range from modest saloons for low-ranking ministers to top-of-the-range Rovers for Cabinet ministers.

Prominent anti-Maastricht Tory MPs voiced concern about the German takeover but were in a tiny minority. 'The Germans flattened Coventry during the war,' said one Tory MP.

Michael Heseltine, the President of the Board of Trade, toured the tea-rooms at the Commons after the announcement by Tim Sainsbury, his Minister of State. Mr Sainsbury assured MPs: 'Rover jobs will probably be more secure today than they have been for some 20 years.'

Robin Cook, Labour's trade and industry spokesman, said the pounds 800m paid by BMW proved that the Government had sold Rover at a 'knock-down price' to BAe.

But Dick Evans, BAe's chief executive, said it was unreasonable to make a comparison between the pounds 150m and the pounds 800m. BAe, he said, had invested much more than pounds 150m in Rover and had carried huge debts on its balance sheet.

Those debts, currently running at pounds 900m, will be assumed by BMW on completion of the deal, assuming approval by BAe shareholders and the European Commission.

The Transport and General Workers' Union, one of Rover's biggest unions, gave the deal a guarded welcome, saying it would allow the company to expand its markets.

The TUC general secretary, John Monks, said: 'The fact that we cannot keep home ownership of a real jewel in the crown of British industry reflects the weakness of British manufacturing and the absence of long-term commitment to it on the part of the Government.'

The deal was greeted enthusiastically in Germany, where BMW shares soared.

By purchasing Rover, BMW has leapt ahead of its arch-rival, Mercedes, in the race to expand beyond the luxury car market.

(Photograph omitted)