German car maker BMW AG completed the pull-out from its loss-making British Rover subsidiary on Wednesday, selling Land Rover to Ford Motor Co and sweetening the deal by agreeing to take on the unit's debt.

    BMW said it would bear all of Land Rover's long-term debt as part of the three billion euro ($2.73 billion) sale. It declined to give the value of the debt, though media reports have said it could be as high as one billion marks ($465 million).

    The sale comes two weeks after BMW sold Rover Cars to UK consortium Phoenix for a token 10 pounds and threw in a 500 million pound ($737 million) loan to ease its exit.

    Ford will take over production of the four-wheel drive Range Rover, Discovery, Freelander and Defender models at Land Rover's Solihull manufacturing plant near Birmingham on June 30. It will also take charge of the Gaydon engineering and design centre.

    The world's second-biggest car maker, which already owns the cherished British Jaguar and Aston Martin brands, will also take over Land Rover's dealer network and the British Motor Industry Heritage Centre, BMW said in a statement.

    The agreement puts Ford in charge of 13,000 Land Rover workers. Earlier this month the company said it would end production of its own brand cars at its Dagenham plant, near London, from the first quarter of 2002.

    BMW shares were up 1.9 percent in afternoon trade on the Frankfurt bourse at 31.30 euros. The benchmark DAX share index was down one percent.

    WRANGLES IRONED OUT

    BMW and Ford agreed provisionally on a three billion euros Land Rover sale in a memorandum of understanding on March 16, but speculation mounted during Ford's subsequent two-month assessement of the operation that the deal could falter.

    Ford chief Jac Nasser and his BMW counterpart Joachim Milberg held a meeting in Cologne last week to iron out a wrangle over the value of the deal, according to one German newspaper report. BMW declined comment.

    As part of the agreement, which still requires regulatory approval, Ford will pay two billion euros up front and a further one billion in 2005.

    The sales this month of Rover and Land Rover appear to have won BMW a reprieve from speculation about its vulnerability to a takeover. The company vowed to make a fresh start after ending an unhappy period in the UK.

    ``This agreement is, after the sale of Rover, the second decisive step for carrying out the new strategic development of the BMW group,'' BMW Chairman Joachim Milberg said in a statement.

    Both Ford and General Motors Corp have been touted as potential bidders for a 48 percent BMW stake held by the billionaire Quandt dynasty. But the family has repeatedly denied it intends to sell its holding.

    The Land Rover sale, combined with its agreement to hand over Rover Cars to the UK Phoenix consortium for a token 10 pounds earlier this month, marks the end of six tough and controversial years of Rover ownership.

    Losses at Rover, which has been plagued by the strong pound, drove BMW $2.5 billion into the red last year and forced the Bavarian group to make a 3.1 billion euros provision in 1999 to cover the subsidiary's disposal.

Article Date: May 24, 2000
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