Last updated: August 16, 2006 3:18 am

BMW agrees to sell Rover name to SAIC

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BMW, the German carmaker, has agreed to sell the Rover brand to Shanghai Automotive Industry Corp, completing the Chinese carmaker’s cut-price takeover of the failed British name.

SAIC has agreed to pay just over £11m ($21m) for the name, according to people close to the transaction.

Together with the £67m it paid for the design rights for several Rover cars it gives the company everything it wanted at a fraction of the cost of the £200m deal it was discussing with MG Rover before the Birmingham carmaker collapsed last April.

MG Rover went into administration with the loss of 6,000 jobs after long-running rescue talks with SAIC failed. SAIC could not be contacted last night.

The deal will pitch the MG and Rover names into competition for the first time in nearly 40 years, with the marques clashing in the unexpected territory of eastern China.

The MG badge was sold, together with rights to the almost identical MG range of cars and the factory in Birmingham, by administrators for £53m to China’s Nanjing Automotive.

However, the sale is awaiting a final decision from Ford Motor, the US carmaker which has a right of first refusal on the name. It is not expected to take up its right, granted when it paid BMW €3bn ($3.8bn) for Land Rover in 2000, but Ford
said it remained under
consideration. BMW said: “While an agreement has been reached, the completion of the sale is conditional upon whether or not Ford takes up its right to buy.” It refused to confirm the price tag.

The price reflects the high cost of setting up a new brand and the value car buyers attach to brand history, even though Rovers will be made in China by a Chinese company.

According to one person familiar with the sale, it is likely to be completed in September, allowing SAIC
to put the Rover badge
on Rover-designed cars it will soon start building in China.

Under a condition put in place when Ford bought Land Rover, SAIC will not be able to put the Rover name on sport-utility vehicles, although it already controls Ssangyong, the South Korean 4x4 specialist.

The rights to almost identical MG models are held by China’s Nanjing Automobile, which plans to build cars in China under the MG name and restart Rover’s former Birmingham factory for low-volume MG production.

MG and Rover were last in competition in 1968, before British Motor Holdings and Leyland Motor were merged to form the car behemoth
British Leyland.

When it collapsed seven years later it was nationalised, and eventually sold off or shut down piece by piece, leaving Rover and MG owned by BAE, then BMW and eventually the Phoenix Four group of Midlands
businessmen.

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