A four-man management buy-out (MBO) announced yesterday has brought control of the UK's biggest retail tyre and exhaust business into Scottish hands.

Under the terms of the contract, a new company, Axle Group Holdings - set up last week for the purposes of the deal - acquires National Tyre Service and Viking International from the Hanover, Germany-based multinational Continental.

The sale price of the two companies - which have a combined annual turnover of more than (pounds) 100m - was undisclosed, although the figure is believed to be well in excess of (pounds) 1m.

The two firms together employ more than 1000 workers across a chain of 214 UK-wide branches, including 60 in Scotland, selling tyres, exhausts, batteries, and other automotive parts. The deal - which was put together by financial advisers KPMG Corporate Finance - also includes 10 wholesale warehouses and an unnamed property company.

The funding for the MBO was also undisclosed, although Alan Revie, who led the buy-out and who until last week was chief executive of Stockport-based National Tyres and managing director of Glasgow-based Viking International, said that it ''did not come from banks''.

''The two companies were not for sale,'' said Revie, 42, who began his career as a tyre-fitter with National Tyres as a 17-year-old and who at 19 became the company's youngest manager. ''So you can imagine the surprise when we approached Continental's management.

''In saying that, however, they were open to the suggestion. I can tell you it did take a fair amount of persuasion.

''Both companies had been operating at a loss, so the idea was obviously interesting to them.

''I think in the end what clinched it, after five months of negotiation, was that we agreed on a five-year tyre-sales contract with them, which meant they could make more money selling the tyres to us than selling them themselves through their own retail branches.''

The MBO ends Continental's tyre retail presence in the UK, although the firm still operates several wholesale distribution centres, as well as manufac-

turing plants for braking systems and other automotive rubber products, in England and Wales.

The 1999 closure of the Continental tyre factory in Newbridge, near Edinburgh, with the loss of 774 jobs, ended its tyre manufacturing presence in the UK. The company, which last year turned over almost (pounds) 7bn, now manufactures tyres at plants in 23 countries around the world.

Continental declined to comment on the MBO.

Both Viking and National Tyre will continue to operate as separate entities under the same names, although the financial nerve-centre for the two firms - which currently operates from three sites in England, Scotland, and Ireland - will be consolidated into a single headquarters in Glasgow.

''There will be a few job losses in the consolidation process, although we do plan to bring our financial staff number in Glasgow up to about 50 from the 23 now,'' said Revie.

''Beside that, we have some ambitious expansion plans, which will add more jobs to the group. We plan to build on our fleet-contract deals, which is the fastest-growing part of the business. We also may look at growing our retail and distribution centres since we acquired some excess property in the deal.''

Revie, who plans to invest an initial (pounds) 1m into the enterprise, said he has no qualms about taking on his bigger rivals, such as Euromaster-owned ATS of France or Ford-owned Kwik-Fit. ''We're already the third-largest fleet contractor in the UK for tyres and exhausts. Eventually, we'll be number one.''

The four members of the MBO team - all of whom were among the senior management at National Tyre and Viking - have more than 70 years' combined experience running tyre businesses. Revie added: ''I know this sounds strange, but I have a passion for tyres. We all do, and that is what will bring us the success. It is just a fantastic feeling to be in control of your own destiny.''