Vickers announced in a surprise U-turn on Thursday that it had agreed to sell Rolls, a byword for British style for almost a century, to VW for 430 million pounds ($714.4 million), reversing an earlier decision to back BMW's 340 million pound ($565 million) offer.

The news sent shares in British engineering company Vickers soaring seven percent, adding 17P to 252.5P. Under the VW deal, Vickers plans to return a total of 273 million pounds to shareholders, against a planned 188 million under the BMW agreement.

While VW is now in the driving seat, its CEO Ferdinand Piech cautioned that the fight was far from over, warning there was a chance BMW would raise its offer for the last and most illustrious big name in British motoring."It is fully possiblethat now BMW will come back once again with something higher," Piech said in an interview with German newspaper, Braunschweiger Zeitung published on Friday.

But he said BMW's ability to stay the distance in the race for Rolls was limited, dismissing BMW's latest threat to pull its engines from the new Rolls Silver Seraph car as nothing more than "sabre rattling."

Vickers commercial director, Andrew John, said on Reuters Television that the bid race was still not closed, indicating there was still time for BMW to step in with more money.

"If we receive any other credible offer then of course we will consider it; we could do nothing less."

John dismissed suggestions that the company had accepted VW's new higher bid in an effort to pressure BMW to sweeten its long-standing preferred bid.John said the extra cash on the table was the ultimate reason for acceptance:"The main feature of course is the 90 million pounds increase in price over the BMW deal, which we announced at the end of April. It'sexcellent shareholder value and we have a duty to get the best for our shareholders."

Steve Young, from management consultancy A.T. Kearney said if BMW did lose to a more aggressive VW, it would be strategic error."This is the sort of brand which comes up once in a lifetime," he told Reuters Television.

The future of the luxury car-maker now lies in the hands of shareholders and of aero-engine manufacturer Rolls-Royce Plc, which owns the Rolls brand name.

Rolls-Royce Plc told Reuters on Thursday that it still backed its long-standing business partner BMW.

"While their (BMW's) offer remains on the table, the best outcome for us would be for shareholders to accept the BMW offer," said Peter Barnes-Wallis, spokesman for the aero-engines group.

Rolls-Royce Plc claims it has the right to veto the sale of the carmaker to a foreign buyer if it deems the deal to be unsatisfactory.

This right is enshrined under a 1973 agreement which predates Vickers' ownership of the Rolls carmaker.That right isbeing challenged by Vickers through the European courts with a judgment still pending.

Meanwhile, Vickers shareholders are due to vote on both offers at special meetings on June 4, with 95 per cent of the shares held by institutional investors.

The big investors' firepower will mean small, more vocal investors are likely to be sidelined in the debate over Rolls's future ownership.Vickers chairman Colin Chandler said that he believed Vickers had done the right thing by its shareholders and by Rolls."I am confident as to the strong prospects for Rolls-Royce Motor Cars under the ownership of either BMW or Volkswagen -- both are leading players in the luxury automotive segment, capable of continuing to develop this premier business."