Industrial and property group MAG has submitted a letter of intent to Contintental to buy the company's  strike-hit tyre factory in France where 1,120 workers have been told they will lose their jobs.

MAG, based in the United Arab Emirates, said it wants to produce 3m tyres a year at the factory in Claroix, northern France, with around half its current workforce. It has given Continental 14 days to respond.

"We have yesterday sent a letter of intent to Continental ... the objective is to regulate the relationship until we reach a final agreement," MAG vice-chairman Fawaz Sabri said.

Continental said on 6 May it was ready to hold talks with MAG on selling the Claroix plant, a move which could bring an end to France's most high-profile industrial dispute.

Continental said in March it would close the plant in as well as a site in Hanover due to the global economic downturn.

"We intend to get more information and details on the factory to put our business plan together," Sabri said, adding it was the group's intention to buy the plant, its land and equipment.

A Continental spokesman confirmed it had received the letter of intent: "We are still open for negotiations ... but there are still a number of open questions."

Sabri said after completing a preliminary study it was looking to produce 3m tyres a year, meaning it would need 400 to 500 staff, effectively halving the plant's workforce.

French unions at Continental have won an agreement from management to give them a pay-off of EUR50,000 (US$69,970) in compensation for the plant's closure.