BMW's supervisory board today is expected to approve the disposal of its heavily loss-making Rover Cars business and Longbridge factory to Alchemy Partners, a British private equity group.

The German carmaker is understood to be ready to pay Alchemy a significant sum to take on Rover cars whose losses have cancelled out the strong profits growth at the BMW car division.

The decision to dispose of Rover was greeted with relief in the Frankfurt stock market, sending BMW shares soaring.

The future of more than 10,000 Rover workers and many more thousands in the components industry in the West Midlands hangs on Rover Cars.

BMW's management board and the Quandt family, BMW's principal shareholders, are understood to have run out of patience with Rover's mounting losses, which reached €1.1 billion-€1.3 billion (£870 million - £1.02 billion) last year.

BMW intends to retain the profitable Land Rover four-wheel-drive business and the new Mini, due to be launched this year, with the Longbridge plant and Rover 25, 45 and 75 car production going to Alchemy.

Last night neither BMW nor Alchemy Partners were willing to comment, but sources close to the deal are said to "expect an announcement of a deal in principle [today]".

Alchemy Partners, founded in 1997, has previously taken over a DIY chain from Boots and privatised a number of British public companies. One rival venture capitalist said: "It is a feature of today's markets that a leveraged buy-out group such as Alchemy has the access to equity and debt to pursue a deal such as Rover."

Alchemy is also expected to gain control over the Rover sales network.

It is understood that Alchemy plans to run the facility at a capacity of about 200,000 to 250,000 units a year. The business would be targeted more carefully at markets where Rover has a strong presence particularly in northern Europe.