Magna International Chairman Frank Stronach said it was too early to say whether the auto parts maker would bid for all of the Chrysler group, but confirmed the two companies plan to meet, according to a newspaper report today.
Stronach, founder of Canada's biggest auto parts maker, said Magna officials will hear presentations at Chrysler's headquarters in Auburn Hills, Mich., in coming days.
Magna has been touted as a potential suitor for Chrysler since parent company DaimlerChrysler said in mid-February that it is considering all options for the struggling North American unit.
"We have huge contracts with Chrysler, we have thousands of employees involved," Stronach told the Globe and Mail. "It's very important that we have a total understanding of what it is all about. You might say we have a fiduciary duty to our employees to take a look and see (if) can we find a solution."
Magna generates some 25 percent of its $24 billion in annual sales from DaimlerChrysler, and about half of that comes from the Chrysler group. The Canadian company's relationship with Chrysler is the deepest of all its links with its customers, which include most of the world's automakers.
But Stronach also said it was too early to tell if Magna will need to go as far as a takeover of all of Chrysler's operations.
"At this point, in order to know where everything stands, we naturally have to take a look at the facts and the data," he said. "Where it will go, nobody can predict. Our predicament will be we do not want to compete with our customers."
On a conference call to discuss its fourth-quarter profit last week, a Magna official said the company has no intention of levering up the balance sheet and that it would want to have cash on hand to be able to finance a transaction.
Asked whether he would be willing to overcome his aversion to taking on debt, Stronach was quoted today as saying: "There's two parts to it. Does it make economic sense and, in our case, we do not want to compete with customers."
Recent media reports stated that Chrysler officials have already given presentations to private-equity firms Blackstone Group and Cerberus Capital Management LP earlier this week.
All Rights Reserved. Do not reproduce, copy and use the editorial content without permission. Contact us: firstname.lastname@example.org.
Anytime and anywhere to know the dynamics of China's auto industry