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How Phoenix did the deal to edge out Alchemy

John Towers warned the BMW board that Alchemy, favourites to buy Rover Cars in the early stages, would “up the stakes at the last minute”. Mr Towers said he studied previous Alchemy takeover deals and could not find a case where the venture capitalist did not walk away from the table during the final days of negotiations “in the hope the seller would come back with a better offer”.

The day when talks between BMW and Alchemy broke down (April 28) was the day Mr Towers realised his Phoenix consortium was in with a chance.

“I was convinced from the outset something could be done, but only when Alchemy pulled out did I think something might be done,” he said.

Mr Towers said trust between Phoenix and BMW, and a mutual in-depth knowledge of the business, were major reasons for the success of the negotiations. The Rover business plan that Phoenix submitted to BMW was “one of the turning points of their perception”, he said.

“It was a good plan, a sensible plan and it took a medium and long-term view of the business.”

Mr Towers has created a lean management structure for Rover and is pressing ahead with creating a “stakeholder” culture. Four non-executive directors, John Towers, Nick Stephenson, John Edwards and Peter Beale, the original members of Phoenix, take 40% of the shareholding; 35% goes to the employees; and 25% to the franchised dealers.

The dealer and employee shareholdings will be managed by a trust.

Mr Towers said he had “got all the people we wanted into key positions in the business”. He called the appointment of Peter Stevens as product design director “key to our prosecution of the MG strategy”.

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