Ford to pay £1.8bn for Land Rover
17 March 2000
Ford is to buy Land Rover from BMW, completing the German company's break-up of the Rover group. The US car giant said it had a memorandum of understanding with BMW to buy Land Rover's assets for £1.85bn ($2.96bn).
Ford expects to complete the deal in the third quarter of this year. The German car maker is retaining the Mini marque, and selling the rest of the unprofitable Rover group to the venture capitalist firm Alchemy Partners.
"Land Rover is known throughout the world and fits perfectly into Ford's growing family of world-class brands," said Ford chairman William Clay Ford Jr. BMW chairman Professor Joachim Milberg said: "The decision to sell Land Rover was certainly not easy. But in the light of our new strategy, we welcome the approach of Ford."
Land Rover was viewed as the jewel in the crown of the Rover empire and BMW had been expected to keep hold of it. Range Rovers, Land Rovers, Freelanders and Discoverys are produced in Solihull, West Midlands. The plant employs 9,500 people.
Last year Land Rover had worldwide sales of 177,800, an increase of 7.4% on the 1998 figure. In the US, Land Rover's second-largest market behind Britain, sales rose 37.1% last year to 29,380 vehicles. The marque will join Ford's range of "premier" brands including Jaguar, Lincoln and Aston Martin.
"Land Rover is a terrific global brand with a wonderful heritage," said Ford chief executive Jac Nasser. Analysts say Land Rover will be a good fit for Ford which has no great presence in the off-road vehicle sector of the British market.
Land Rover production began in 1948
More than two million have been sold
Sales in 1999 were 178,000
There are four models in the range
"It would add what is right now a very profitable boutique brand," said John Casesa of Merrill Lynch. "Ford, if it executes well, should be able to take advantage of its large existing scale in sport utilities by combining the Land Rover and Ford truck platform."
About 60% of Ford's sales in the US are light trucks and minivans, compared with 50% in the rest of the world. Land Rover began more than half a century ago, based on a US Army Jeep. It was developed by two brothers who were senior executives at Rover.
More than two million have since been sold, and it is estimated that 70% of them are still operating somewhere in the world. The vehicle's sturdy, utilitarian qualities made it a favourite on farms, with the armed forces and with explorers.
The original, now renamed the Defender, has been joined by other models:
Range Rover - an attempt to combine the ruggedness of the original with the comfort of a Rover car was launched in 1970
Discovery - a 1989 response to four-wheel drive competition from Japan, this version seats seven
Freelander - this "baby" model was designed and produced under BMW in 1998, offering the on-road attributes of a family saloon.
The company has changed hands several times during its existence, swallowed up by British Leyland, taken over by British Aerospace and then passed on to BMW for £800m in 1994.
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