CAR parts and logistics company Unipart has decided to make a multi-million pound break from car maker Rover.

The BMW-owned car manufacturer currently owns a 19 per cent stake in Unipart - given to it when the Unipart Group of Companies was formed through a management buyout in 1987. Now Unipart wants to buy back all of the shares.

A Unipart spokesman said over the past 12 years it had successfully diversified into new areas and industry sectors and was poised for growth.

He said: "The UGC Board, with the full support of its major institutional investors, decided that it is no longer appropriate for Rover Group to be a shareholder and participate in the financial performance of the company."

Unipart said it will shortly be seeking the approval of shareholders - employees, former employees, directors and institutional investors - to buy back the Rover shareholding at £1.36 a share.

Unipart, which employs about 1,500 people in the Oxford area, has a deal to supply Rover after-sales parts until 2002. But Rover has announced it will be setting up its own parts operation, which will be managed from Oxford, with the parts stored in warehouses run by Caterpillar Logistics Services in Leicestershire.

The move will create 300 jobs at Rover's Oxford plant where a new parts organisation is being set up to source, market and administer the distribution of parts.

The impending loss of the Rover contract was blamed for a recent crash in the value of Unipart shares.

But the company said it was making "significant investment" developing new business areas, including forging partnerships with other car firms.

It is also diversifying into a wide range of other business, including providing supplies to the health service, caravan and marine accessories, information technology, security and a major investment in two rail parts firms.

Story date: Wednesday 17 March

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