German car maker BMW is preparing a one billion pound plus bid for Vickers Plc, the Rolls-Royce to Challenger tank group, in an effort to thwart a potential offer from Mayflower Corp Plc, said the Sunday Telegraph.
BMW is determined to acquire Rolls Royce Motor Cars now that Vickers has decided to sell it and will not allow a rival bidder to get in its way, said the newspaper.
BMW is also interested in Cosworth, Vickers high performance motor components maker, it added, and could fund a bid for Vickers with ease. BMW supplies engines to Vickers Rolls-Royce Motors subsidiary.
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Both the Sunday Telegraph and the Sunday Times newspaper said they expected engineering group Mayflower to launch a hostile bid for Vickers this week, unless a stockmarket decline forces it to delay.
Mayflower makes body panels for Rolls Royce Motor Cars. BMWs Rover arm is Mayflowers largest British customer. Mayflowers cash offer, which will carry a paper alternative, will value Vickers at more than twice Mayflowers market worth, said the Sunday Times.
The article said the Mayflower bid has the support of BMW. Quoting experts the Sunday Times said BMW would prefer to hold off from buying Rolls Royce now because it faces big demands on its resources from Rover and its aero-engines venture.
Daimler-Benz AG, owner of Mercedes has retained JP Morgan to advise it on the possibility of bidding for Rolls-Royce Motors, said the paper.
Analysts estimate that in a competitive tender Rolls-Royce Motors, which also owns Bentley, would be worth 400 to 500 million pounds, much of which Vickers could return to shareholders.
Two weeks ago Vickers said it planned to sell its subsidiary Rolls-Royce Motors by auction. On Wednesday Mayflower was forced to make a statement, saying it was still keeping its options open on a possible bid for Vickers.
On Friday Vickers questioned whether Mayflower had sufficient resources to finance the deal.
Vickers will seek to show that its shareholders, led by Schroders Investment management which owns almost 20 percent of it will lose value if they allow Mayflower to take over Rolls-Royce Motors, said the Sunday Times.
It will also attack Mayflowers plans to sell off Vickers Defence Systems, which makes the Challenger 2 tank, said the paper.
Vickers confirmed to Reuters on Sunday that it had won an order worth more than 100 million pounds to supply 20 Challenger 2 tanks to Oman. An article in The Mail on Sunday newspaper said Mayflower is in talks with BMW about a possible one billion pound bid for Vickers.
Rolls-Royce Plc, which licenses the Rolls marque to Vickers, would veto use of the name unless it was happy with a take-over, said the Financial Mail.
No one at Mayflower or Vickers was available to comment on the press articles.