Germany's MG Technologies AG has suspended plans to sell its automotive plastics business to Flex-N-Gate Corp. MG also warned that it plans to take the U.S. firm to court.
MG executives noted in a Sept. 15 news release that it twice had extended the deadline to sell Dynamit Nobel Kunststoff GmbH to Urbana, Ill.-based Flex-N-Gate, but has been unable to complete the deal.
``Flex-N-Gate has failed to meet its obligations under the sale and purchase agreement,'' the Frankfurt, Germany-based firm stated. ``MG will take the necessary legal action against Flex-N-Gate because the latter has failed to honor its contractual obligations.''
Flex-N-Gate officials did not respond to requests to comment.
MG and privately owned Flex-N-Gate had inked an agreement for the sale in May, with the American bumper specialist set to pay 430 million euros (equivalent at the time to $513 million) for Dynamit Nobel.
DNK does more than $1 billion in annual business in Europe, where the products from its 22 factories include injection molded bumper fascias.
Dynamit Nobel also produces thermoplastic body panels for DaimlerChrysler AG's Smart cars.
The purchase would have provided a big bump to Flex-N-Gate's business in Europe, where it now has six factories in Spain. It also would have given a big hike to the company's overall sales, now estimated at $1.5 billion.
Flex-N-Gate has been building beyond its previous strength as a metal bumper specialist, purchasing plastic fascia maker Ventra Group Inc. of Oakville, Ontario, in 2001, to begin offering more complete bumper modules.
MG said it will continue to operate Dynamit Nobel, based in Weissenburg, Germany, as an independent unit while it examines ``various options'' for its future. The division has seen its sales and profit improve through the first part of 2004, with 449 million euros ($545.9 million) in sales for the first six months, up from 439 million euros ($533.8 million ) for the same period in 2003.
Its pretax profit also improved by 21.7 percent during the first half of the year, MG executives noted.