$4.7 Billion bid for Chysler
Magna, equity firm make $4.7-billion bid for Chrysler, report says
March 23, 2007
Canadian auto supplier Magna International Inc. and a private equity partner have made a bid to buy the Chrysler Group for about $4.7 billion, according to an analyst report sent early this morning by KeyBanc Capital Markets.
“Our sources indicate DaimlerChrysler is very interested in divesting itself of Chrysler,” KeyBanc auto analyst Brett Hoselton wrote in the report. “While MGA views its offer as low and unlikely to prevail, the Company also sees it as an opportunity to purchase an inexpensive stake in the automaker should other bidders retreat.”
The note did not name the private equity partner but said its sources indicated Magna had talked with the Blackstone Group and Cerberus Capital Management, private equity firms considered by many industry experts as the leading contenders to buy the Chrysler Group. Magna and the private equity partner have already written a joint letter of interest with the bid to DaimlerChrysler, according to the note. Magna would take a 20% to 25% stake in the deal.
Magna, based on the outskirts of Toronto, supplies a wide range of auto components from seats to power-trains. It also assembles complete vehicles in small volumes for DaimlerChrysler, General Motors Corp. and BMW AG.
Although a bid by Magna and its partner may not be successful, DaimlerChrysler AG is serious about separating itself from the Chrysler Group, Hoselton wrote. DaimlerChrysler was formed nine years ago when Daimler-Benz AG acquired the Chrysler Corp.
Speculation of a sale started Feb. 14 when DaimlerChrysler Chairman Dieter Zetsche said all options were on the table for the Auburn Hills unit, which posted an operating loss of $1.5 billion last year. A restructuring plan for turning around the Chrysler Group also was announced at the Feb. 14 conference, but the KeyBanc note raised doubts about these efforts.
“Chrysler apparently lacks any substantive internal restructuring plan,” Hoselton wrote in his note. “We believe this is by design and indicates the parent’s interest to sell the automaker.”
DaimlerChrysler officials have declined to talk about the possible sale of the company or options being considered. Magna officials also have declined to talk about a possible bid, but in an analyst conference call late last month, a Magna executive would not rule out the possibility.
“Without commenting specifically on Chrysler, the world is changing and I think everybody needs to look at more competitive ways to do business,” Magna’s co-CEO Donald Walker said at the time. “It’s open discussion on a lot of topics, including Chrysler right now.”
Contact JOE GUY COLLIER at 313-222-6512 or jcollier@freepress.com.
