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Magna, Onex lead in bid for Chrysler, German report says

From detnews| May 08,2007

Canadian auto supplier Magna International Inc. and its investment company partner Onex Corp. appear to have emerged as the leading bidder in the final round to buy the Chrysler Group, according to a report in the German media.

Magna is the only serious prospective buyer for DaimlerChrysler AG’s struggling U.S. unit, Germany’s Automobilwoche reported over the weekend.

A decision could come later this month, with the deal being finalized within a couple of months, according to the report. Several people familiar with the process have told the Free Press that a deal likely could not be finalized until fall.

Magna International plans to hold its annual meeting later this week in Toronto.

Analyst Brett Hoselton of KeyBanc Capital Markets said in late April that the Magna-Onex offer could be worth $5 billion and give Magna a 25% to 50% ownership stake and Onex a 40% to 65% stake.

Under this scenario, DaimlerChrysler would keep a 10% stake.

Other bidders are believed to have been the private equity firms Cerberus Capital Management and Blackstone Group. Kirk Kerkorian, who tried to buy Chrysler in the 1990s, made a $4.5-billion offer, but his contentious history with DaimlerChrysler apparently kept his offer from being taken too seriously.

A second round of bids to buy Chrysler were due during the middle of last week, and Magna is known to have submitted its offer Tuesday, the Free Press reported last week. DaimlerChrysler officials were expected to pick a preferred bidder — or two — to go into further negotiations as early as last Friday.

Chrysler’s future was thrown into flux Feb. 14 when DaimlerChrysler Chief Executive Dieter Zetsche indicated that the unit might sold when he said all options were on the table.

In April, he confirmed that talks were ongoing with interested parties.

The Chrysler Group reported $1.5 billion is losses last year, a number that was recently readjusted to $680 million because of a change in accounting practices. In February, the Chrysler Group announced its second major turnaround plan in the past decade, which includes cutting 13,000 jobs, closing an assembly plant and reducing production.

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