MG Rover turns to Eversheds in joint venture with Chinese manufacturer

Eversheds has advised MG Rover Group on a deal that could safeguard thousands of jobs in the UK and which will eventually lead to the creation of two new cars.
The Eversheds team acted on a new joint venture between Rover and China Brilliance Industrial Holdings, a vehicle com-ponent manufacturer and sales specialist with an annual turnover of $2.8bn (£1.95bn).
The two parties will cooperate 50-50 on arrangements relating to the finance, design and development of the new cars, as well as the supply and manufacture of a new range of engines. While the cars will be designed and developed in the UK, the manufacturing and building processes may be split between the UK and China.
Eversheds partners David Stevenson, Sue Lewis and Richard Prowse were first instructed by Rover at the end of 2001 and completed the deal in Los Angeles, although it was signed in Shanghai following 11 days of negotiations.
Stevenson said the deal had been designed to boost car manufacturing in both the UK and China.
"This must be the most important deal for the UK car industry since the purchase of Rover from BMW two years ago," he said. "The global car industry is immensely competitive and this tie-up has all the ingredients necessary for the parties to benefit from critical economies of scale.
"This will allow development costs for new products to be spread over bigger volumes, which combined with an increased purchasing power for components will go to make the end product more competitive."
Eversheds' relationship with Rover stretches back over two years to when it first advised on the original purchase of Rover from BMW in May 2000.
The firm then acted on the "strategically significant purchase" of engine manufacturer Powertrain in 2001, as well as on the £340m purchase of Rover Financial Services during the same year.
"Everybody knows that in today's automobile manufacturing marketplace global scale and reach are essential, and this deal allows two complementary concerns to work together to achieve it," Stevenson said. "And with thousands of jobs depending on Rover, the deal has serious implications."