BAe assures MPs on Rover plans

THE GUARDIAN
By Andrew Cornelius Industrial Correspondent

British Aerospace told MPs yesterday that it would support Rover's plans to invest £1 billion over the next five years if the proposed takeover of the business was given the go-ahead by the European Commission.

"We want to develop the business", Professor Roland Smith, BAe's chairman, told the House of Commons Trade and Industry Committee. Mr Graham Day, Rover's chairman, also promised the committee that neither "Wrings nor firings" depended upon the outcome of the merger talks.

He could not guarantee Rover jobs, because he had no guarantees from customers that they would buy the company's cars, and future employment levels depended entirely upon the number of cars sold. However, there was a warning that if the EEC blocked BAe's take over of Rover the decision would create damaging uncertainty for the future of both groups.

"If for some reason this deal were not to go ahead then uncertainty would be created and that uncertainty would not be good for the Rover Group." Professor Smith stressed that the group's £150 million takeover of Rover, together with an £800 million write-off of debts by the government, was conditional on approval of the deal by the EEC and BAe shareholders. If the terms of the deal were to be changed by the EEC, then the BAe board would not necessarily continue with the takeover.

Mr Day said that he believed that the takeover by BAe was a much better option than a takeover by a rival motor company, which would have resulted in rationalisation of the dealer network, people, and manufacturing facilities. He would not comment in detail on Rover's future model programme beyond confirming that the new R8, the fleet car model, would be launched next year. He also added that the new K series engine was currently being tested.