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Komatsu, Sinomach compete for Germany's MAG Group: sources

FRANKFURT (Reuters) - Japan's Komatsu <6301.T> and China's Sinomach are to battle it out to buy German machine tool maker MAG Group , three sources familiar with the sale process told Reuters on Sunday.

Goldman Sachs , which is running the sale, has narrowed the field to the two Asian companies, one of which could end up paying as much as 700 million euros ($890 million), the sources said.

Komatsu, which makes diggers and other construction equipment, is seen as best placed to win the auction, the sources added.

An MAG spokesman would only say that a new owner should be found by the end of the year. Officials at Komatsu and Sinomach could not immediately be reached for comment.

MAG's U.S. arm is owned by U.S. investor Mo Meidar, who built up MAG Group seven years ago from a number of separate industrial businesses. He had to cede control over MAG's European division to banks including Deutsche Bank and Commerzbank .

The sources said that Komatsu and Sinomach were both interested in taking the two regional entities, but one of the sources said there were additional suitors for the U.S. arm, which caters mainly to the aerospace industry.

MAG, which employs 3,500 staff, generated revenue of $1.3 billion in 2011. ($1 = 0.7871 euros)

(Reporting by Arno Schuetze, Alexander Huebner, Philipp Halstrick, Denny Thomas; Writing by Ludwig Burger; Editing by David Goodman)

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