Wagon, the West Midlands automotive components group, is poised for a major push into Europe if talks to acquire French rival Oxford Automotive prove successful.

Warwick-based Wagon said that buying Oxford Automotive - whose customers include Peugeot, Renault and Daimler Chrysler - would put it in a stronger position to compete for larger contracts.

Shares in Wagon, which also makes impact protection systems and roof racks and has 18 factories including three in the UK, were susp ended yesterday while advanced talks continued.

Wagon said the combined group would have critical scale in supplying the European automotive component supply industry, as well as strong relationships with the major French and German manufacturers.

In a statement the group added: "Oxford's presence within automotive structures, particularly in large stampings and mechanisms, combined with Wagon's existing capabilities within automotive structures, would form a group

with the capacity to offer customers complete module capability and would offer the enlarged group the ability to compete for larger projects."

Oxford had revenues of 530 million euros (£362.5 million) in its last financial year.

It is a privately held company which Wagon said was "well-capitalised" after exist-ing shareholders bought $100 million (£57.7 million) of extra shares in October last year.

It became a standalone business in early 2005 after its US-based parent company filed for bankruptcy in 2002.

Oxford's factories in France, Germany and Turkey special-ise in large stampings - the production of larger car parts such as body panels and doors.

Wagon employs 5,000 people across 18 factories which include UK operations at Brownhills, Coventry and Wantage, Oxfordshire.

If a deal goes through, the shareholders of Oxford would be paid in Wagon shares.

Four Oxford directors, including American financier Wilbur Ross - one of the main shareholders - will also join the board as non-executive directors while Wagon's chairman, Christopher Clark, its chief executive and financial director would retain their positions on the board of the new company, Wagon said.

Wagon has its origins in Wagon Repairs - set up in 1918 by a number of railway freight wagon manufacturers to take over their repair service business.

It went public in 1936, although it declined after the Second World War.

It was not until 1988 it switched to the automotive business for the first time, buying Banro Industries whose operations included what is now the Wagon's Brownhills plant.

The firm later bought businesses in Spain, Belgium, the Czech Republic, France and Italy. Last December Wagon posted a 16 per cent fall in first half profits, down from £8.5 million to £7.3 million. Sales fell from £220.5 million to £204.2 million, partly as a result of the demise of MG Rover.

Wagon, which will make a further statement "in due course" on the talks with Oxford, supplied small assembly parts and steel stampings to Longbridge.