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.

 

This sounds good. I hope this goes through.

 

Magna International Front-Runner in Chrysler Bidding

Posted by Damien Weaver on Apr 30 2007 06:10:24 PDT



Canadian auto parts dealer Magna International Inc. [ticker: MGA] has taken the lead in the bidding for a major portion of Chrysler Group, industry analysts said.

"We now believe there is increased likelihood that MGA could take a direct minority ownership stake in Chrysler," said KeyBanc Capital Markets analyst Brett Hoselton in a Friday investors’ note.

Magna also seems to be dominating among Chrysler’s powerful unions, which hold just less than half the votes on parent company DaimlerChrysler AG’s [ticker: DCX] supervisory board, analysts said. A supervisory board is the German equivalent to a board of directors in the United States.

 

They were the Co. I would prefer if Chrysler were to be sold. They have a vested interest in the sucess of a solvent Chrysler Corp. Good luck to them and I hope they prosper and prove to Diamler that they messed up by not being patient.

 

Come on Magna, make my dream come true. A divorce from this marriage made by Satan.

 

Thanks to purnrg for the article.



And the plot thickens. Chrylser - part Russian, German, and Canadian interesting.

Russian billionaire buying Magna stake


Magna International Inc. is making a seismic shift in direction with an investment in the Canadian auto parts giant by Russian billionaire and automotive entrepreneur Oleg Deripaska.

Under the terms of an agreement announced early Thursday, Mr. Deripaska's companies will pay $1.54-billion (U.S.) to acquire 20 million Class A subordinate voting shares of Magna from treasury.

Mr. Stronach described the deal as a win for shareholders, for the company and for its employees. He said this morning that he started investigating the possibility of expanding in Russia about a year ago. "You just can't walk up to somebody and say, will you be my partner," he said in a telephone interview. "I sat down with my guys and I said look, Russia will be a big opportunity, let's see if we can get a strategic partner."

Prior to the announcement, Mr. Stronach shot down rumours that bubbled up Wednesday and have been floating around for months that he was preparing to sell the whole company to Russian interests.

"There would never be a sale," he said Wednesday night.

He said he is concerned about the North American-based auto makers and their continued decline in market share.

The three major North American auto makers, which are among Magna's customers, are eliminating tens of thousands of jobs in Canada, the United States and Mexico and shutting dozens of plants as they adjust to years of declining market share, mainly at the hands of Asia-based auto companies.

"My No. 1 criteria has always been, how can we have jobs, how can we have a healthy company," he said.

Subject to acceptance and approval by the Toronto Stock Exchange, the 20 million shares would be issued for $76.83 apiece, representing the volume-weighted average closing price of Magna's shares on the New York Stock Exchange over the 20 trading days ended April 20, 2007, the last trading day prior to the receipt of investment proposal letter from the Russian businessman.

In addition, subject to the approval of a "majority of the minority" of the holders of Class B shares, Magna would repurchase all Class B shares not held by the Stronach Trust for cash consideration of $114.00 (Canadian), representing a premium of approximately 30 per cent over the volume-weighted average closing price of Magna's Class A shares on the Toronto Stock Exchange over the 20 trading days ended April 20, 2007.

The addition of Mr. Deripaska as a strategic partner marks a dramatic change for Magna, which is bidding to buy a piece of the Chrysler group in partnership with Canadian-based buyout and investment firm Onex Corp.

The move will increase Magna's financial liquidity as it hooks up with Onex in what is expected to be a holding company that would own Chrysler.

If the Magna proposal is successful, DaimlerChrysler will retain a piece of the No. 3 Detroit-based auto maker it bought in 1998 for $36-billion (U.S.).

Mr. Stronach said earlier Wednesday that Magna's plan for Chrysler involves DaimlerChrysler keeping a stake in the beleaguered division.

The investment by Mr. Deripaska is not related to the Chrysler situation, Mr. Stronach said, noting that Magna has sufficient cash on hand for the Chrysler transaction.

But Magna needs to expand in growing markets such as Russia. "Everybody needs cars there. They've got oil."

Magna already has a contract with AvtoVaz, another Russian auto maker, to redesign a Lada car.

The deal announced Thursday should lead to the construction of several Magna parts plants in Russia and could lead to Magna doing complete vehicle assembly in that market as well, he said.

Magna is one of Canada's most successful companies, having grown from the small firm that Mr. Stron

 

we will find out on monday... maybe now the chrylser ME will actually be built