Magna-Onex bid for Chrysler gains momentum

Frank Stronach

Bradford Wernle | Automotive News / April 27, 2007 - 11:02 am / Magna International Inc. is a step closer to becoming a minority shareholder in the Chrysler group, an industry analyst asserts.

In a report issued today, Brett Hoselton of KeyBanc Capital Markets Inc. said the UAW has "approached Magna with a framework concession package."

That package would pave the way for the sale of the Chrysler group to Magna and its financial partner, the Canadian private equity firm Onex Corp. The UAW favors Magna because the union remains vehemently opposed to the sale of Chrysler to a stand-alone private equity firm, Hoselton wrote.

Magna's stake in Chrysler would range from 25 to 50 percent, while Onex would claim a stake of 40 to 65 percent. DaimlerChrysler AG would retain a 10 percent stake, Hoselton wrote.

He added that the Magna bid values Chrysler "in the mid- to high $5 billion range."

Hoselton did not identify the source of his information, except to say he had discussed the situation with "many industry sources."

The UAW could not be reached for comment this morning. Magna declined comment.

Magna is one of four bidders. The others are private equity groups Cerberus Capital Management and the Blackstone Group and Las Vegas billionaire Kirk Kerkorian.

Magna's move is not without risk, Hoselton reported. The supplier would have to shoulder more debt, and it might lose some parts sales to General Motors and Ford Motor Co.