Newswires buzzing over possibility of Michelin buying Continental's tire operations

Several international news agencies are moving stories over media wire services regarding speculation that Michelin is pursuing the purchase of Continental’s tire division. The accounts say that as the Schaeffler Group continues to buy large amounts of Continental’s stock shares, it opens up the possibility of putting Michelin in the driver’s seat should Continental’s tire operations become available for sale.

The speculation was further fueled by an interview recently published in the German magazine WirtschaftsWoche, in which Michelin CEO Michel Rollier says the company is eying Continental’s tire division “with a great deal of interest,” although the likelihood of a deal remains slight.

The Reuters news service cites “cartel-related problems” over possible governmental restrictions among the European Union and other nations’ regulatory bodies that could derail such an arrangement.

“The opportunity has not presented itself until now and it would not be a surprise if the Continental tire business remains a core part of the Conti group,” Reuters quoted Rollier as saying. “If nevertheless the opportunity would arise, we would look at the matter with interest, even though our (market) positions in Europe and North America do not seem compatible with the current antitrust legislation.”

Meanwhile, Michelin is scrapping plans announced in 2007 to build a new tire plant in Guanajuato, Mexico, “due to the decline of regional tire markets, mainly as a result of lower demand.” The proposed plant was intended to produce tires for a now-sagging North American tire arena.

“At the same time, productivity gains and additional investments in existing North American production facilities will enable Michelin to respond to continued strong demand for high-performance and large-diameter tires,” the company says in a statement. “Mexico is an important manufacturing base for Michelin, which has invested more than $200 million in its Querétaro plants over the past two years, creating more than 100 new jobs.”

For more information, visit www.michelin.com.