KUALA LUMPUR, Malaysia (June 26)—Continental A.G. has agreed to buy a 30-percent stake in Sime Darby Berhad's tire activities—DMIB Berhad and Sime Tires International (M) Sdn. Bhd.—which are being brought together under a common unit to be known as Merit Manufacturing Sdn. Bhd. Continental and Sime Darby signed a memorandum of understanding covering the deal June 26 in Kuala Lumpur. The deal includes options for Conti to increase its ownership stake over time, Continental said. The move will strengthen Conti's manufacturing and distribution position in Asia at a time when the Pacific Rim nations are trying to put together an Asian free-trade zone similar to the North American Free Trade Agreement, a Conti spokesman said. A combined DMIB-Sime Tyres would report sales of more than $200 million annually. DMIB recently ceased operations at its Simex Aircraft Tyre Co. subsidiary.