BBC NEWS | Business | Rover sold to Nanjing Automobile

Chinese carmaker Nanjing Automotive has secured ownership of MG Rover for an unknown sum, after a three-way bidding battle spread over three months.

It was one of two Chinese companies trying to buy the assets of MG Rover, the other being Shanghai Automotive.

Although Nanjing was the smaller firm it secured a deal with administrators PriceWaterhouseCoopers (PwC) on Friday.

"Nanjing will now begin to take control of the assets and develop its plans for the future," said Tony Lomas of PwC.

The news is a blow for UK businessman David James, whose Kimber group had put in two bids to buy parts of Rover.

Earlier this week Mr James, the company-recovery specialist who helped revive the Millennium Dome, told the BBC the combined value of his bid would be about £40m.

Technical facility

Joint administrator Mr Lomas said Nanjing intended to relocate the engine plant and some car production plant to China but to "retain some car production plant in the UK".

He added that Nanjing, China's oldest carmaker, also planned to develop an R&D and technical facility in the UK.

Nanjing Corporation intends to begin to hire staff to assist it in implementing and developing its strategy Tony Lomas, PwC administrator

It is still not known how many workers Nanjing will employ. But according to the BBC's Nils Blythe if Nanjing's proposed long-term plans come to fruition it could create 2,000 jobs in the UK.

Geoffrey Robinson, Labour MP for Coventry North West and former boss of Jaguar, told BBC Radio 4's Today programme the deal "seems fraught with difficulties".

"We can only wish them luck but they are a very small company and they will face formidable difficulties."

Hiring staff

For a transitional period a rump workforce will continue to be employed by MG Rover Group and engine maker Powertrain.

It is not really a surprise that one of the Chinese bidders has won as they were looking to buy the whole operation Dr David Bailey, University of Birmingham business school

They will assist the administrators as they have for the last three-and-a-half months, following the demise of Rover in early April when it ran out of money after a proposed tie-up with SAIC collapsed.

"In the meantime Nanjing Automobile (Group) Corporation intends to begin to hire staff to assist it in implementing and developing its strategy," Mr Lomas said.

Nanjing had been close to winning the bidding war a week ago, but SAIC then came back with another offer, and Mr James put in his offers this week.

"It is not really a surprise that one of the Chinese bidders has won as they were looking to buy the whole operation," Dr David Bailey, of the University of Birmingham's business school told the BBC.

"However some had thought that Shanghai was the front runner given the previous proposed tie-up with Rover and the fact they had bought some of the copyrights."

Production plans

Nanjing had earlier said it wanted to restart car production in the West Midlands, but may look to use other sites as well as the former Rover site at Longbridge in Birmingham.

There is no doubt in our mind that on first viewing the SAIC proposals appeared to suggest more jobs for Britain Tony Woodley, general secretary T&G union

Cars will be built under the MG marque and may include sports models and small and medium sized vehicles.

However, it also previously expressed plans to shift production of small and medium-sized cars to China, and then export kits to the UK for final assembly.

That has lead the T&G union to fear the Chinese company may not maintain substantial production in the UK.

"Having viewed both the Nanjing and SAIC bids, there is no doubt in our mind that on first viewing the SAIC proposals appeared to suggest more jobs for Britain, " Tony Woodley, general secretary of the union said on Friday.

He said the union would now look to make "urgent contact" with Nanjing for talks on jobs.

Nanjing has indicated before it plans to use MG as its main marque in Europe while developing other MG Rover brands, such as Austin, elsewhere.

Arup has been advising Nanjing on the proposed deal and chairman John Miles said: "The fact that Nanjing has bought the entirety of MG is an indication of their bigger intention to become a global automotive company."

Property rights

However, Nanjing's successful bid could start a prolonged legal battle.

SAIC bought the intellectual property rights to sell the Rover 25 and 75 models in China during a previous attempt to take over the carmaker.

Nanjing facts Founded in Jiangsu in 1947 China's oldest carmaker Makes cars, trucks, buses Has 16,000 employees Previous Fiat partnership Hopes to sell 300,000 vehicles by 2006

Nanjing had previously rejected any claims that SAIC's ownership of the rights to the Rover 25 and 75 engines would affect its plans.

And Honda - which owned the rights to some of MG Rover's technology - has repossessed equipment and blueprints, making it more difficult for any buyer to restart production of the Rover 45 - based on the Honda Civic - or MG ZS models.

"It is an interesting legal position, maybe Nanjing think they can make MG models of the 25 and 75," said Dr Bailey.

"There could still be some tie-up between the two Chinese firms. After all, earlier in the year when MG Rover and SAIC were having talks Nanjing had planned to be a joint partner in that."