British giants merge
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Government welcomes move
THE BRITISH Leyland Motor Corporation—that is the title of the new company which, it was announced on Wednesday, is to be formed by merging British Motor Holdings and the Leyland Motor Corporation. The executive chairman of BMH, Sir George Harriman, is to be chairman of the new company, while LMC's chairman and managing director, Sir Donald Stokes, will be deputy chairman and managing director. As chief executive of the new company, Sir Donald will have the early task of preparing and implementing a plan for creating "an integrated organization" in accordance with principles already agreed by the boards of the two companies.
The merger is being aided by loan capital of £25m from the Government's Industrial Re-organization Corporation. BMH has an authorized capital of £85m, while LMC has an authorized capital of £55m. The merger will be implemented by a -scheme of arrangement";the new companywill acquire all the issued ordinary shares of BMH and Leyland on the basis of one share for each share in Leyland and in BMH.
The new concern, controlling £275m assets, will have sales of around £800m a year, 200,000 employees and will bring AEC, Albion, Austin, BMC, Daimler, Guy, Jaguar, Leyland, MG, Morris, Princess, Riley, Rover, Scammell, Thorn ycroft, Triumph and Wolseley car and commercial makes into the same manufacturing group, There are other large subsidiaries such as Pressed Steel Fisher. and many smaller ones.
On the truck side, BMC and Leyland-group products are largely complementary, but Guy is more directly competitive in class with Leyland. products, while Daimler and Leyland are the two biggest rivals in the heavy p.s.v. field.
In a joint statement on Wednesday, BMH and LMC said the directors of the two companies were convinced that the
merger would be in the interests of shareholders, employees and the country.
The new organization will be Britain's largest single exporter, and it is in this overseas sphere that the merger is expected to show the greatest benefits. At home, it brings into one ownership the bulk of the British-owned sector of the motor industry; ranged in competition are the three big US-backed concerns of Ford. Vauxhall and Rootes/Chrysler.
News of the merger put £30m on to BMH shares at one point, but they dropped back later on Wednesday to settle at 15s 6d—a gain of is 41d. By contrast, Leyland shares dipped 1 lid to 16s Oid—a loss of some £1 Om in market value.
This merger deal comes at a time when Leyland has just reported its second biggest profit, while BMC has been recovering from a loss-making situation. Both companies say that in their current financial years they are trading profitably.
It is about two years since BMH took over the Jaguar company, with its Daimler and Guy subsidiaries. More recently, LMC acquired control of Rover, having much earlier bought Standard-Triumph. On the truck side, Leyland had progressively acquired Scam mell, Thornycroft, Albion and AEC in the post-War years. The British,Motor Corporation was formed in 1952 in a merger of Austin and Nuffield interests.
When the merger was announced, Sir Donald Stokes told CM it appeared the most urgent need was to rationalize in the p.s.v. field, The Government welcomes the merger and will not refer it to the Monopolies Commission.