Volkswagen Set to Bid £400m for Rolls-Royce Motors in High-Stakes Takeover Battle

Strategic Insights -

Volkswagen is poised to submit a £400m bid for Rolls-Royce Motors in a move that could shake up the automotive industry. The German automaker, which has an existing bid of £315m on the table, has raised its offer in an attempt to outdo BMW's agreed bid of £340m. The battle for control of the Crewe-based maker of Rolls-Royce and Bentley cars is expected to be intense, with VW seeking to overcome BMW's advantages in terms of its existing relationship with Rolls-Royce plc and its position as engine supplier to the new Rolls-Royce and Bentley four-door models.

Key Takeaways:

  • Volkswagen is expected to submit a £400m bid for Rolls-Royce Motors, a 33% increase on its initial offer of £315m.
  • The bid would put VW on a collision course with Rolls-Royce plc, the aero-engine maker backing BMW's offer.
  • VW has hired Panmure Gordon as its stockbroker in London to help build a share stake in Vickers, Rolls-Royce's parent company.
  • BMW has offered a headline figure of £340m for Rolls-Royce, but the underlying value of the bid may be closer to £365m.
  • VW plans to treble output to 10,000 cars a year if it secures the bid, while BMW aims to treble output to 6,000 cars a year.
  • VW's takeover bid could be politically contentious due to the presence of Gerhard Schroder, Lower Saxony's prime minister, on the VW board.

Statistics:

  • Volkswagen's initial bid for Rolls-Royce Motors: £315m
  • BMW's agreed bid for Rolls-Royce Motors: £340m (or £365m underlying)
  • VW's proposed new bid for Rolls-Royce Motors: £400m
  • Rolls-Royce Motors' production capacity: 5,000 cars per year (current)
  • VW's planned increase in production capacity: 5,000 (to 10,000)
  • BMW's planned increase in production capacity: 5,000 (to 6,000)

Sources:

  • The Sunday Times, 1998