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MAG Eyes Continental’s French Tyre Factory
SHARJAH - Syrian-owned MAG group said on Wednesday it was aiming to seal a deal to buy a French tyre factory from Continental by the end of the year and would resume production in 2010 after restructuring the plant.
MAG, a Dubai-based industrial and property group owned by Syrian millionaire Moafaq Al Gaddah, is expecting to hear from Continental AG this week about its June 9 offer to buy its Clairoix plant, vice-chairman Strategy and Finance Fawaz Sabri told Reuters in an interview.
Sabri declined to give a possible figure for the deal, but said the group could finance it through its own equity. The group would set up a revolving credit facility for future “working capital”,
he said.
“If they sign (on the due diligence process) by the end of this month, we can start the process on July 1, and by November or December could sign a final agreement ... production would be in 2010,” Sabri said at the firm’s headquarters in Sharjah.
MAG has been holding talks with Germany-based Continental since May about the plant, which has been at the centre of a 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.
Clairoix workers have staged a series of protests to fight the closure, which would eliminate 1,120 jobs. They have hurled insults and eggs at managers, burnt tyres on the streets of Paris and trashed two buildings.
Sabri said the group, which currently supplies tyres, had been in the market to buy a manufacturer for about 15 years to gain the technological expertise to make tyres, but the previously booming auto industry had meant that there was little to buy.
“Six months ago there was a shortage of 50 million tyres a year ... now in Europe it’s in excess of 25 million tyres,” he said.
Sabri said MAG plans to reduce the plant’s production to 3 million tyres a year from 8 million, meaning it would only need 400 to 500 staff. That would effective halve the plant’s workforce.
The plans would include shutting the original equipment manufacturer (OEM) element of the factory, comprising about 25 percent of production, which supplies the likes of Mercedes, he said.
“Our first target is Africa because the transportation is not so expensive from France ... then Middle East and Europe,” Sabri said.
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