Dodge Challenger Forums - Magna, unions in talks to help Chrysler

Chrysler could be a Canadian company.......then we would get our Challenger for sure.

Thanks to purnrg for the heads up on this posting

Magna, unions in talks to help Chrysler

Greg Keenan
12:37 EST Monday, Feb 26, 2007

Magna International Inc. chairman Frank Stronach met with leaders of the two largest unions at the Chrysler Group last week to discuss ways of helping the auto maker out of its current crisis.

The meetings came as rumours swirled through the auto industry that Magna wants to take over Chrysler in a deal that would turn the Canadian auto parts giant into a full-fledged auto maker.

Canadian Auto Workers union president Buzz Hargrove confirmed last week that he met with Mr. Stronach to discuss the situation at Chrysler as its parent DaimlerChrysler AG considers selling the company or seeking partners for it.

Mr. Hargrove would not reveal the issues raised in the meeting.

That meeting and a similar meeting with United Auto Workers president Ron Gettelfinger came as rumours swirled through automotive circles that Magna is prepared to buy Chrysler.

Senior industry sources knowledgeable about Magna cast strong doubt on that idea Monday—as they did last week—saying it would violate two rules Mr. Stronach has adhered to since a financial crisis in the late 1980s at the company he founded. Those rules are that Magna will never again take on significant debt and that it will not compete directly with its customers.

A purchase of Chrysler is estimated to start in the $5-billion (U.S.) range.

The Canadian company, which is based in Aurora, Ont., has no comments on the reports or the rumours, spokeswoman Tracy Fuerst said Monday morning.

Magna is doing “substantial due diligence work on Chrysler and is seriously considering the potential purchase of the company,” Brett Hoselton, an analyst for KeyBanc Capital Market said in a report to clients Monday.

Mr. Hoselton himself cast doubt on the potential of a deal, but noted that Magna officials had held talks with senior UAW officials.

“Our sources indicate that UAW leadership was combative, and as a result, the meeting was short and unproductive,” Mr. Hoselton wrote.

Magna already manufactures vehicles on a contract basis for Chrysler, its sister company Mercedes-Benz and other customers.

Protecting that franchise and expanding its size as a contract supplier may be behind the discussions Magna is having with Chrysler, he added.

“Magna believes it can use Chrysler as a means to ‘guarantee volume' to its own supplier operations,” Mr. Hoselton quoted sources as saying.

Magna shares were trading down 28 cents at $92.49 in mid-day trading on the Toronto Stock Exchange.