MG Rover have dismissed claims that it is to be taken over by China's biggest vehicle maker. The Birmingham-based manufacturer and the Shanghai Automotive Industry Corporation signed a co-operation agreement two months ago to develop new models. But suggestions yesterday that SAIC was preparing to take a minority or controlling stake in the Longbridge company were rejected by MG Rover chairman John Towers. "In our talks with Shanghai Automotive there has been absolutely no discussion at all about an equity stake or an acquisition of the business," he said. "It is very flattering to think people believe that would be the case but it is not the case." Peter Beale, vice-chairman of MG Rover Group, told The Birmingham Post: "These claims have no basis. They are wrong. MG Rover remains MG Rover." Both companies, he said, were waiting for the Chinese government to give final approval to their plans to "develop a far reaching strategic agreement". Mr Beale said: "We have not had an approach for an equity stake by Shanghai Automotive and anything on those lines would have to be the right thing for MG Rover and Longbridge." Mr Beale said the basis of the company's decision-making process was always to do the best thing in the interests of Longbridge and MG Rover. The denials followed reports in a European automotive trade publication which quoted a source, claiming to know MG Rover and Shanghai Automotives' intentions, as saying: "I think over the course of months it becomes more and more Shanghai and less and less Longbridge. "Two or three years from now I would imagine SA to have the vast majority of the company. The relationship is good." However, Mr Beale said: "There are no plans by Shanghai Automotive to take all the MG Rover production and stick it in China. "While they believe they should manufacture close to their home market, they feel it is in the best interests of our relationship to maintain the Britishness of the MG Rover brands in the design, manufacturing and selling. "The co-operation agreement we have signed with them is incredibly beneficial to both companies and good news for MG Rover." Future plans between the two companies envisage producing hatchback versions of a new Rover medium-size car which will be built at Longbridge and the saloon version in China. The market for hatchbacks in China is minimal. Kevin Howe, group chief executive of Phoenix Venture Holdings which owns MG Rover, said in June, when the co-operation agreement was signed in Shanghai, that there had been discussions with several companies in China but the agreement with SAIC would see a significant expansion in volumes of current and future products. Next month executives from MG Rover and SAIC will visit Poland to look at the manufacturing potential of the former Daewoo FSO plant in Warsaw. Phoenix Venture Holdings is Britain's seventh-largest private equity group. | 
