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I Witnessed: The sale of Rolls-Royce and Bentley
4 years ago
Rolls-Royce and Bentley had been twinned since the Thirties
It was a great story, but as Richard Feast put it in his excellent book Kidnap Of The Flying Lady, ‘with hindsight, it seems like a tremendous fuss over very little. Two of the world’s most powerful car makers were falling over themselves to pay good money for a company that considered itself very successful if it sold 3300 cars in a year’.
In 1998 BMW sold 1.19 million cars, VW some 4.75 million.
Yet, as Pischetsrieder had confided to me in an interview in 1997, while it would be fairly simple for BMW to build a sporting saloon to rival a Bentley, the car wouldn’t sell for much with a blue and white roundel on its bonnet. The Rolls-Royce badge, though, would enable him to raise prices to the skies.
He later confirmed that even then BMW had already been working on a replacement for the current Rolls-Royce model line up. What’s more BMW had an arrangement with Rolls-Royce PLC to develop a small jet engine and he and its chairman, Sir Ralph Robins, got on well. Which is why in March BMW’s £340 million first-and-final bid for the whole company looked to be a shoo-in. Then things got complicated.
"VW apparently knew the terms but had failed to secure the titles: with absolute arrogance, Piëch had just assumed they were his"
A word of explanation here. When the original Rolls-Royce company collapsed over the massive development costs of the RB211 engine in 1970, the receiver sold off the car company Rolls-Royce Motor Cars with only the rights to use the Rolls-Royce name and trademarks as long as they remained in British hands. Legal ownership of the name, the interlocking RR badge, the Charles Sykes sculpture of Eleanor Thornton (aka The Flying Lady, aka the Spirit of Ecstasy), and the Grecian column radiator remained with Rolls-Royce PLC the aerospace company. Some 28 years later this would become highly significant.
Meanwhile Volkswagen had been sniffing around the sale since the previous year, asking hypothetical questions of Vickers, Rolls-Royce PLC and BMW about splitting the brand and where permissions might end up. As we later learned, negotiations were handled not by Piëch, but by Robert Büchelhofer, VW’s sales and marketing director.
In April, Vickers had a shareholders’ meeting in London’s Docklands and it became known that Volkswagen had put in a counter offer for the company, but not for how much. For a few days afterwards Vickers boss Colin Chandler held the line that BMW’s bid was the most favoured; but institutional shareholders were greedy for more and when it turned out VW’s bid was for £430 million it carried the day, especially as there was an 80p per share payout compared to just 55p from the BMW offer. Had Piëch prevailed?
‘When Colin [Chandler] told me the company was up for sale,’ said Pischetsrieder, ‘I wrote a figure on a piece of paper and put it in my desk drawer.’ That figure was slightly higher than BMW’s eventual bid, but ‘much lower than what VW paid.’ At an extraordinary general meeting on June 5, 1998, the shareholders accepted Volkswagen’s offer. But what, exactly, had VW bought? Throughout the following month, Pischetsrieder worked behind the scenes to secure a deal with Sir Ralph Robins to use the Rolls-Royce trademarks on a series of cars, which sealed the fate of the deal and confined VW to the purchase of just Bentley and, of course, the Crewe factory where the cars had been built since the end of the last war.
And while the deal had been signed on the 19th hole of a German golf course the previous day, the first we knew of this was at the Institute of Mechanical Engineers, when Piëch admitted he had never before met Sir Ralph. All those in the room who knew the situation with the ownership of the Rolls-Royce trademarks sat aghast. VW apparently knew the terms but had failed to secure the titles: with absolute arrogance, Piëch had just assumed they were his.
There are those who say that this was German companies working with each other to their mutual benefit, but I was there and it absolutely wasn’t. Pischetsrieder had played his hand with expertise and skill, Sir Ralph had achieved what he saw as a fitting outcome for the Rolls-Royce name and Piëch had assumed his money would buy him everything and it didn’t.
The photos show three men shaking hands, but only two of them are laughing, one of them has a rictus grin and behind the mask is pure fury.
