New Delhi, April 18: Germany’s Continental AG has signed an agreement to acquire V.K. Modi-owned Modi Tyres Company.

“The international automotive supplier and the world’s fourth-largest tyre manufacturer Continental has signed an agreement with Modi Rubber Ltd for the acquisition of a 100 per cent shareholding in Modi Tyres Company Ltd, a subsidiary of MRL,” Continental Group said in a statement.

“After completion of the transaction, Modi Tyres will become a fully owned subsidiary of Continental Corporation,” the statement added.

The completion of the transaction depends on the fulfilment of several conditions, the statement said without giving details.

Modi Tyres already makes products for the German firm, and the deal will give a headstart to Continental to scale up its India business.

After the acquisition, Continental will produce bias and radial tyres for trucks and buses as well as radial tyres for cars in the country.

“This development underlines Continental’s commitment to the Indian market and is part of the company’s strategy to invest in growing markets in Asia for its core businesses,” the company said.

Continental will fight for market share with multinationals Bridgestone, Goodyear and Michelin, which is in the process of setting up a large unit in India, but the biggest challenge will come from locals such as Apollo, MRF, JK Tyres and Ceat who dominate the market.

Continental, which is present in 46 countries with about 1.5 lakh employees, clocked sales of 26 billion euros in 2010.

A few years ago, Modi Tyres revived its technical collaboration with the German company to make truck and bus cross-ply tyres.

Shares of Modi Rubber shot up 10 per cent to close at Rs 75.35 on the Bombay Stock Exchange today.