Jeremiah 29:11

Magna confirms it may buy Chrysler

The Canadian auto parts maker says it is involved in a possible deal for the struggling division.
April 13 2007: 12:11 PM EDT
TORONTO (Reuters) -- Magna International Inc. confirmed Friday its involvement in a possible deal for DaimlerChrysler's Chrysler division.

In a statement, the Canadian auto parts maker said it "continues to review potential alternatives" regarding Chrysler's future, but said there were no assurances that a transaction would occur.

DaimlerChrysler confirmed just over a week ago it was in talks to sell the troubled division, and media reports have suggested that Magna could be a bidder, possibly in a joint offer with buyout firm Onex Corp. (up $0.23 to $29.00, Charts).

The only bid that has been made public so far is a $4.5 billion cash offer from U.S. investor Kirk Kerkorian, while others believed to be interested include private equity firms Blackstone Group and Cerberus Capital Management.

Reports have suggested DaimlerChrysler is hoping to get around $8 billion for the unit.

Shares of DaimlerChrysler (down $0.67 to $82.35, Charts) fell 1 percent in morning trading on the New York Stock Exchange.

Magna has been pegged as a potential suitor ever since DaimlerChrysler said in mid-February that it was considering all options for its struggling North American unit.

Magna's relationship with Chrysler is the deepest of all its links with its customers, which include most of the world's automakers.

The Aurora, Ontario-based company gets some 25 percent of its $24 billion in annual sales from DaimlerChrysler, and about half of that comes from the Chrysler group.

Magna makes vehicles on a contract basis for Chrysler in Austria, runs a paint shop for the company at one of its assembly plants in Ohio and has parts ranging from seats to door trim panels on most Chrysler vehicles in North America.

The company, which owns real estate spinoff MI Developments and horse racetrack operator Magna Entertainment, was founded in 1957 by Frank Stronach.

The Austrian immigrant, who has a background in tool and machine engineering and is now one of Canada's top-paid executives, remains chairman of the company.

Shares of Magna (down $0.22 to $76.89, Charts) fell less than 1 percent in morning trading on the New York Stock Exchange. In Canada, shares were off 14 Canadian cents at C$87.37 on the Toronto Stock Exchange.