Phoenix will take responsibility for the development, production and distribution of Rover cars under the deal, and maintain volume car production at its Longbridge plant.
News of the agreement will come as a huge relief to unions and government ministers, who had feared the loss of tens of thousands of jobs in the politically sensitive midlands region if a rival bid by Alchemy Partners had been successful.
Alchemy, a UK private equity house, had planned to turn Longbridge into a niche producer of top-end sports cars.
Juergen Dinner, a BMW spokesperson, told Bloomberg TV:
“The first priority for BMW was always to prevent the closure of Rover and keep as many jobs as possible.”
The final hurdle to securing a deal between BMW and Phoenix was overcome yesterday morning when one of America's largest banks, First Union, offered £200m to finance the Phoenix bid for the loss-making UK carmaker.