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Parts maker makes bid for Chrysler

Alisa Roth Mar 23, 2007

KAI RYSSDAL: Blackstone’s not the only private equity group in the world, of course. And there are about as many ways to spend private money as there are willing sellers.

It’s been more than a month since DaimlerChrysler’s CEO said he’s open to selling the company’s U.S. division. Since then, private equity firms have been sniffing around Chrysler. There’s been huge amounts of speculation and rumor on both sides of the Atlantic about what might happen next. Especially considering an end of March deadline for initial offers.

One of those offers has apparently come from an anonymous private equity firm working with one of Chrysler’s own parts suppliers. Marketplace’s Alisa Roth has more

ALISA ROTH: Analyst Brett Hoselton

writes that parts-maker Magna and an unnamed private equity partner have offered around $4.6 billion for Chrysler. Magna would own about a quarter of that.

Jim Gillette

is a consultant with Michigan-based CSM Worldwide. He says back in the old days, car companies made their own parts. Today, the parts suppliers provide a lot of components and often design them, too.

JIM GILLETTE: It’s not unusual that you would see a supplier such as Magna today in a position to carry forward and build the entire car. The part that’s missing would be the actual marketing and the sales of the vehicles down to the consumer level.

He says Magna’s already been putting together cars for Chrysler at a plant in Austria.

But Craig Fitzgerald

of consultancy Plante and Moran says there would be downsides to owning Chrysler. Among other things, he says, it could complicate Magna’s business with other car makers.

CRAIG FITZGERALD: Magna’s a wonderful technology company. Who’s gonna get those technologies first? Is Chrysler going to get it or will BMW get it, for instance? And I think in Magna selling to BMW, I think that becomes a bit more difficult discussion, if they buy Chrysler, than it would be today.

There’s also the small matter of timing. The union contract with the Big Three is up for renegotiation this summer. Many say no decision will be made before that gets sorted out.

In New York, I’m Alisa Roth for Marketplace.

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