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Automotive

Canadian company is front-runner to buy stake

DETROIT - Canadian auto parts supplier Magna International Inc. has emerged as the front-runner in the bidding to buy a significant stake in the Chrysler Group, according to several industry analysts.

KeyBanc Capital Markets analyst Brett Hoselton said in a note to investors yesterday that Magna has become the leading contender for Chrysler.

"We now believe there is increased likelihood that MGA could take a direct minority ownership stake in Chrysler," Mr. Hoselton wrote.

The Canadian company also appears to be the favorite of Chrysler's powerful unions, which control just less than half the votes on parent company DaimlerChrysler AG's supervisory board. In Germany, a supervisory board is the U.S. equivalent of a board of directors and would be key in approving any deal to split up the company, keep it whole, or spin off parts.

Magna has publicly acknowledged its interest in buying Chrysler, and its chairman, Frank Stronach, is interested in a bigger role in the global automotive business.

The parts supplier already assembles cars for DaimlerChrysler in Austria through its Magna Steyr subsidiary, and it paints Jeep Wranglers at the Toledo Jeep Asssembly complex. Reports indicate that Magna was in talks with the Onex Corp. conglomerate about teaming up on a bid for Chrysler.

"They've been the suitor du jour for the last couple of weeks now," said George Magliano, an auto analyst at consulting company Global Insight.

Mr. Hoselton said in his note that the United Auto Workers union has approached Magna with a framework for a concession package that would move the deal along.

Officials with the UAW, Magna, and DaimlerChrysler would not comment on the reports.

But Buzz Hargrove, president of the Canadian Auto Workers union, which represents about 11,000 Chrysler workers, said he knows the UAW has not offered any concessions.

"That's absolutely not true," he said.

UAW President Ron Gettelfinger has said he prefers to keep Chrysler with Daimler, and he has strongly opposed any sale to private equity firms, which he said would sell off Chrysler in pieces and cost union members their jobs.

Mr. Hargrove said he would prefer Magna to the private equity firms that have studied Chrysler's finances.

"We'd prefer someone in the industry that has a record of job creation and building, and Magna's the only name mentioned so far that has that kind of record," he said.

General Motors Corp., which also is interested in Chrysler, would have too much duplication and would likely cut jobs, he said.

Chrysler lost $1.5 billion in 2006 and is undergoing a recovery plan that will cut 13,000 jobs in Canada and the United States and pare back production.

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