The Chrysler Saga Continues: Is Magna the Favorite?

DaimlerChrysler CEO Dieter Zetsche would do no more than confirm his company was in negotiations to sell its N. American Chrysler unit, frustrating the more than 8,000 shareholders at the company's annual meeting in Germany, and leading shares lower by 1.4% at yesterday's open (shares recovered to finish down just .5% by the close). The New York Times described the atmosphere at the annual shareholder meeting as "tense" adding that it appears "Daimler’s marriage to Chrysler is already finished — except for the ink on the divorce papers." Meanwhile, with Zetsche tight-lipped, the Wall Street Journal is speculating that DaimlerChrysler management may prefer Canadian auto parts maker Magna International over the private equity companies that have formally bid for Chrysler. The reason: management would like to sell to a partner interested in making Chrysler "profitable on a sustainable basis" while finding "the best possible option for the employees." More than private equity, Magna, which already does as much as a third of its business with Chrysler, is interested in boosting its auto-making operations, leading it to gain at least some union support. As a parts maker, the company also has industry knowledge the private equity firms lack. Magna refused to comment on the speculation.

Sources: Wall Street Journal, New York Times
Commentary: DaimlerChrysler CEO Admits To Negotiating Sale of Chrysler • Toyota Continues To Gain U.S. Market Share At Expense of Big 3 • DailmerChrysler: In The Firm Embrace of Magna International
Stocks/ETFs to watch: DaimlerChrysler (DCX), Magna International (MGA). Competitors: General Motors (GM), Ford (F), Toyota (TM), Honda (HMC), Nissan (NSANY)

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