AM Online

SAIC 'on brink of buying MG Rover'

MG Rover is on the verge of a £1bn investment deal for a majority share with the Shanghai Automotive Corporation (SAIC) that will help secure the future of its giant Longbridge plant.

Under the joint venture with the SAIC, a new company will be set up to produce cars for the growing Chinese market – as reported in AM, November 19. As parent company Pheonix Venture Holdings disposed of the last remaining major piece of land at Longbridge on a sale and leaseback deal to a property developer, MG Rover chairman John Towers insisted the plant would remain entirely in British hands.

He added that by 2007, he hopes to build 200,000 cars a year in China for the country's domestic market.

Resting on the approval of the Chinese government the deal is not due to be finalised until January, Towers said he was confident the deal, which would see the Chinese company owning 70% of the new company and MG Rover 30%, would go ahead.

“All the work associated with the joint venture is going on - the funding, the provision of people, the engineering development - they are happening."

MG Rover spokesman Stewart McKee says: "We do need the final approval of the Chinese authorities in order to proceed and that's the point at which the final details will emerge. For both parties, this is a very good agreement. For MG Rover, we get the opportunity to sell cars in China, which is an expanding market. It also allows us to jointly fund the development of new products which is key to the growth of the business."

BBC Midlands Today correspondent Robin Punt said many people would be surprised to hear money is already arriving from China.

"There's a misconception that the firm will, as a result, become Chinese owned and controlled but that's not true," he said. "The mood among workers at Longbridge is excitement that their future is secure, although the deal has yet to be finalised. But they're also angry that many sections of the British media have run-down the company."

Towers is set to leave for the start of the final round of negotiations in China within the next two weeks.

More information will be covered in the December 3 issue of AM. (source: bbc.co.uk)

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