MG Rover has confirmed it is to take control of the Powertrain plant in Longbridge from BMW, enabling the company to produce its own engines as well as supply them to other companies.

Around 1,300 employees will also be transferred with the business when the handover takes place at the end of this month.

MG Rover and BMW have also settled the completion accounts dispute in connection with the sale of Rover Cars.

When the contract was signed last year by the BMW Group and the Phoenix Consortium, the operating activities of Rover Cars were transferred with immediate effect on May 9, 2000. The two companies were then in dispute about the valuation of parts of the business and an independent arbitrator was brought in to resolve the issue. The differences, the companies say, have now been resolved.

Kevin Howe, chief executive of MG Rover Group, said: “We are delighted that all outstanding issues relating to the completion accounts have now been agreed with BMW. Furthermore our ownership of Powertrain Limited enables us to take full control of our engine development and production programmes and delivers yet another of our key strategic milestones”.

The agreement reached today also involves a payment of £65 million to the MG Rover Group.