x Abu Dhabi, UAETuesday 25 July 2017

Sharjah firm's German tyre deal skids to a halt

The planned rescue of a mothballed German tyre factory in France by Moafaq Al Gaddah (MAG), an industrial group based in Sharjah, has collapsed.

The planned rescue of a mothballed German tyre factory in France by Moafaq Al Gaddah (MAG), an industrial group based in Sharjah, has collapsed after the plant's owner rejected its final ?65 million (Dh351.6m) offer. Talks between the German car parts maker Continental, the owner of the tyre factory, and MAG collapsed because of a disagreement over how much tyre producing technology the German firm was willing to cede.

"The Germans simply refused to sell, under various pretexts," said Patrick Devedjian, the French minister for economic recovery, who was involved in the negotiations. "In reality, they don't want a competitor to come in and expand." Mr Devedjian, who was in Dubai for Cityscape, said MAG "has proved extremely patient". "They [both] had agreed to a price of ?25m and then they went up to ?65m. And MAG had accepted."

Fawaz Sabri, the vice chairman for strategy and finance at MAG, said the talks were over. "We understood that they were very reserved about selling, so we became very flexible. We followed them until the end and they were trapped. Now I know that they did not want to sell in the first place." The plant, located in Clairoix, on the outskirts of Paris, produced 7.5 million tyres last year. It is scheduled to shut down next March with a loss of 1,100 jobs. Most of the workers have already been laid off as Continental seeks to cut costs in Europe, where it has a stockpile of 15 million tyres.

"The two parties had led intensive discussions but finally agreed that it was not possible to reach common ground for further talks," Continental said in a statement, without elaborating. Mr Devedjian said that despite fixing a price in advance, Continental refused to give MAG a list of the machines it would leave in the factory. "We cannot sell a factory with machines and technology just like that," Alexander Luhrs, a spokesman for Continental, said last week. "It has taken us a long time to arrive where we are."

MAG, which has been looking at buying a factory for 16 years, is in talks with another group about a similar factory in Europe. "We have been approached by another large group that is producing tyres in Europe," Mr Sabri said. "They are about the same size as Continental. We are examining the opportunity very seriously." The car manufacturing industry has been among the hardest hit sectors since the start of the global financial crisis.

@Email:ngillet@thenational.ae