Contact Us

Home> International News> News detail

$1.54-billion investment may aid Magna's bid for Chrysler

From latimes| May 14,2007

A Russian industrial conglomerate will invest $1.54 billion in auto parts supplier Magna International Inc., raising speculation that the Canadian company is generating cash for a bid to buy Chrysler Group.

Magna, just hours before the start of its annual shareholder meeting Thursday, said Russian Machines, a unit of Russian industrial conglomerate Basic Element, would make the investment by indirectly acquiring 20 million Class A subordinate voting shares of Magna.

Aurora, Canada-based Magna said it would use the investment to boost its efforts in Russian and other automotive markets.

After the annual meeting, Magna founder and Chairman Frank Stronach said he did not think the investment would have any bearing on the company's efforts to buy Chrysler, although he believed that the Russian partner would make Magna more attractive to Chrysler's German parent, DaimlerChrysler.

He said Magna sought the Russian partner because of the potential for rapid growth in that country's car market and because of fears that North American automakers, with which Magna does a substantial amount of its business, would struggle to compete globally.

"Things are too costly in North America," he told more than 1,000 shareholders and employees in a Toronto concert hall. "I do have a worry that the American car industry is not really competitive."

Rich Morrow, an analyst at Jennings Capital Inc. in Toronto who follows Magna, said the company probably was raising money for its bid to buy Auburn Hills, Mich.-based Chrysler.

Under terms of the agreement with Russian Machines, Magna would remain a Canadian company with shares listed on the Toronto and New York stock exchanges.

For its $1.54 billion, Russian Machines would get about 18% of Magna's Class A shares as well as 42% of the shares in a new holding company that would be formed to run Magna. A trust controlled by Stronach would get 42%, with the remainder held by Magna senior management.

Magna also would repurchase all Class B shares not held by the Stronach Trust. Each Class B share now comes with 500 votes, but that would be reduced to 300 under the complex deal.

All Rights Reserved. Do not reproduce, copy and use the editorial content without permission. Contact us:

Install Gasgoo APP

Anytime and anywhere to know the dynamics of China's auto industry

Hot Auto Products| e-Catalog| Auto Products Directory| Auto Parts Manufacturers|

Gasgoo Site: Automotive News| 中文站| 汽车资讯| 出口供应商| 汽车社区|

Copyright Notice © 2016 Corporation and its licensors. All rights reserved.