LONDON – Project Kimber, the British group that tried to buy MG Rover, has signed a memorandum of understanding with DaimlerChrysler AG to purchase the tooling and license the engineering of the Smart Roadster and Smart Roadster Coupe.

The agreement gives Project Kimber more substance than when it was outbid for MG Rover's assets by Chinese auto maker Nanjing Automobile Group.

Project Kimber, a consortium of British executives with automotive experience, has said it wants to become a manufacturer of niche vehicles for third parties as well as making its own sports cars.

Restyled versions of the Smart cars would come back to the market badged as the MG Midget or AC Ace, according to a source close to the project. Project Kimber is named for Cecil Kimber, an engineer and racing enthusiast for MG Car Co. Ltd. in the 1920s and 1930s who also had a brief stint at AC Cars.

DC ended Smart output in December.

A spokesman for Project Kimber says the group will have no comment for several weeks, as its negotiations with Nanjing are at a delicate stage.

The subject of the negotiations is not clear. Kimber has been reported in the past to be interested in acquiring the tooling and rights to the MGF roadster. Nanjing said this week it still plans to manufacture vehicles at the former MG Rover plant in Longbridge, U.K. (See related story: Nanjing Inks Lease for MG Rover Plant )

Other reports indicate Kimber is talking to Nanjing about acquiring rights to certain brand names.

The deal with DC also remains fragile, although Project Kimber evidently has put forth a more solid offer than several other companies.

DC said earlier that Project Kimber was not alone in its interest in the Smart roadster.

The memorandum of understanding with DaimlerChrysler "is to draw up a contract within the next few months which would give Project Kimber the license to redesign, produce and sell the former Smart roadster and roadster coupe under a different brand,” DC says in a statement.

The deal, for an unspecified sum, is to be concluded over the next several months.

The British press has reported that the deal is valued between £25 million and £50 million ($45 million to $90 million). Project Kimber said it had financing for the £25 million bid it made for MG Rover last summer. (See related story: SAIC, Magma Make Formal Joint MG Rover Bid )

The DC agreement confirms reports in the British press since November, when the auto maker decided to discontinue the two models. The final Smart versions of the cars, named Collectors Edition, will be unveiled at the Geneva auto show next week.

Project Kimber is headed by David James, a turnaround specialist, working with the de Montfort automotive consultancy, controlled by Barrie Wills, who has worked at Jaguar Cars and DeLorean Motor Co.

Project Kimber's plan is "to assemble specialist sports cars and contract build niche vehicles for third party car manufacturers in the style of Valmet (Automotive) of Finland and Magna Steyr (Fahrzeugtechnik AG & Co. KG) of Austria, recognizing that, whilst there is overcapacity in volume car manufacture across the European Union, there is a severe shortage of niche vehicle production capacity and management skills," Wills said in a statement last summer.

Press reports citing informed sources indicate the project is considering three British locations and a German site for a plant to produce the cars: Longbridge; Coventry, in a former Dunlop factory that was once the home of Jaguar; South Wales near a Ford of Europe engine plant; and Erfurt, Germany, near a DC engine plant.

DC produced 43,000 Smart roadster and roadster coupes, the latter essentially a convertible with a removable hard top, over the 2-year lifetime of the two vehicles.

Production at Smart's plant in eastern France stopped Dec. 2, but the factory had built up a stock of cars to be sold this year, including the Collectors Edition. A Smart spokesman says stocks probably will be depleted by the end of summer in France, where 698 units were registered last year.