More than Half American

When Chrysler Corp. bought 30% of the voting shares of Britain's Rootes Motors Ltd. in 1964, the opposition Labor Party charged incumbent Conservatives with a sellout, voiced fears that the move would lead to U.S. domination of a major British industry. Laborites hooted at the Conservatives' assurances that Chrysler would not be allowed to increase its Rootes holdings substantially without government sanction. Last week, in a rather full circle, the Labor government found itself bestowing its blessing on a Chrysler takeover. Minister of Technology Anthony Wedgwood Benn announced approval of additional purchases of Rootes shares that will give Chrysler more than a two-thirds interest in Britain's sputtering, fourth-largest automaker.*

All told, Chrysler will funnel some $56 million into Rootes, which produces Humber, Hillman, Sunbeam and Singer automobiles and three lines of trucks. Half will be in the form of an outright loan; the rest will come from the purchase of additional shares, which will push Chrysler's total stock investment in Rootes to $93 million. To damp the fiery protests in Parliament, most of which came from the Labor backbenchers, the complex refinancing arrangements will also call for Britain, through the state-run Industrial Reorganization Corp., to hold about 13% of Rootes voting stock.

The family-controlled Rootes firm, harried by labor troubles, lost $8.4 million in the fiscal year that ended July 31, and estimates are for an additional deficit of $13.3 million in the first six months of the current fiscal year. Moreover, ambitious expansion plans make a major infusion of new money absolutely mandatory. About the only alternative to the Chrysler acquisition was one by government itself--and the Labor ministers wanted no part of that. "The takeover of Rootes by the British government," Mr. Wedgwood Benn explained, "would have involved massive sums of public money without any guarantee that Rootes would remain viable."

With Chrysler's acquisition of Rootes, U.S. firms will control more than half of the British auto industry.

* Behind British Motor Corp., British Ford and G.M.'s Vauxhall.

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