Flying High with Rolls

Among auto classicists, Rolls-Royce is perhaps the proudest name of all. But as it happens, Britain's Rolls-Royce Ltd.

would almost seem to be losing interest in the auto business; it makes only 2,000 cars a year, sells them at a starting price of $18,000, and 80% of its $356 million annual business is done in jet aircraft engines.

Now Rolls-Royce has taken a step that will make it the world's second biggest aircraft-engine manufacturer -- next only to the U.S.'s Pratt & Whitney. For cash and stock worth $175,400,000, Rolls-Royce bought out Bristol Siddeley Engines Ltd., which already has the engine contract for the Concorde, the British-French supersonic transport presently scheduled for test-flying in 1968. Bristol Siddeley has been losing other business, though, including the engine contract for Britain's TSR-2, a tactical reconnaissance plane which the government decided to cancel last year. Meanwhile, Rolls-Royce has been rolling with its new Spey jet, which is being ordered for both U.S. and British civilian and military aircraft.

In the transaction, Rolls-Royce also acquired a holding company called Bristol Aeroplane and, through that, shares of three airframe manufacturers, including 20% of British Aircraft Corp. But since it does not choose to go into direct competition with the aircraft builders who are its steady customers, Rolls-Royce plans to sell these interests--possibly to the British government.

Rolls expects to retain all of Bristol Siddeley's 30,000 workers. Only one important personnel change is contemplated under the merger. Sir James Denning Pearson, 58, the chief executive officer of Rolls-Royce, has long doubled in brass as the company's top engineer. Now he will hold one position: chief executive of the merged company.

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