UAE's MAG says intends to buy Continental plant

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PRESSING AHEAD: Industrial and property group MAG says it is pressing ahead with its proposed purchase of French tyre maker Continental. (Getty Images)

UAE-based industrial and property group MAG is pressing ahead with plans to buy a strike-hit tyre factory in France and has plans to produce 3 million tyres a year with around half its current workforce.

The company said on Wednesday it had submitted a letter of intent to Continental AG to begin due diligence on buying the Claroix plant in northern France which had been slated for closure.

"We have yesterday sent a letter of intent to Continental ... the objective is to regulate the relationship until we reach a final agreement," MAG vice-chairman Fawaz Sabri told Reuters.

Germany-based Continental said on May 6 it was ready to hold talks with MAG on selling the Claroix plant, a move which could bring an end to France's most high-profile industrial dispute.

Continental said in March it would close the plant as well as a site in Hanover due to the global economic downturn.

"We intend to get more information and details on the factory to put our business plan together," Sabri said, adding it was the group's intention to buy the plant, its land and equipment.

MAG has given Continental 14 days to respond.

A Continental spokesman confirmed it had received the letter of intent: "We are still open for negotiations ... but there are still a number of open questions."

Since MAG began discussions, Clairoix workers have staged a series of protests to fight the closure, which will eliminate 1,120 jobs. They have hurled eggs and insults at managers and trashed two buildings.

Sabri said after completing a preliminary study it was looking to produce 3 million tyres a year, meaning it would need 400 to 500 staff, effectively halving the plant's workforce.

"It is an estimate," Sabri said. MAG has yet to appoint a financial advisor or legal team.

French unions at Continental have won an agreement from management to give them a pay-off of 50,000 euros ($69,970) in compensation for the plant's closure.

The global economic crisis has shrunk order books and prompted companies to shut factories across France. Staff at several plants have resorted to locking bosses in their offices to secure better severance packages.

While workers at Clairoix have not resorted to such "bossnappings", their long-running dispute has become the most famous in the country.

Finding a buyer for the site would be a boost to France's government, which faces rising unemployment and is often called upon to help workers at plants that are due to be shut down.

Investors from the Gulf Arab region slowed their investments in Western companies when oil prices started to tumble last year. But the automotive sector has attracted Gulf investments with Abu Dhabi in March buying a 9.1 percent stake in German car-maker Daimler through its listed investment vehicle Aabar.

Porsche SE said this week it is in exclusive talks to sell a stake to Qatar. (Reuters)

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