Magna International in Top Spot for Chrysler Bid

The break up of Daimler-Benz and Chrysler Group is one of the biggest headliningstories that the automotive industry has seen in years. Since the announcement back in February that all options are on the table for Chrysler Group, the dust has now settled on who's definitely interested and who isn't, but no official announcements have been made regarding who's in the lead. For those not in the know, there are three major players running for the ownership of Chrysler: Magna International, Cerebus Capital Management, and the Blackstone Group. After ridding his portfolio of General Motors stock, billionaire Kirk Kerkorian also put in a bid to purchase Chrysler, but didn't have a very warm reception.

Analysts have said that out of all the different firms and groups that are in the running for the Chrysler portion of DaimlerChrysler, it's Canada'sMagna International that's in the lead. It may be one of the world's largest auto parts suppliers, but Magna won't be making this rather costly purchase alone if it wins the opportunity; it's rounded up financial firm Onex to help out with the monetary portion. Besides the fact that Chrysler and Magna have a good standing relationship (Magna builds a large portion of Chrysler Group's European products and components for its North American vehicles), Magna would almost certainly keep the group together, rather than dividing Dodge, Jeep and Chrysler up, and selling them off. Internally, Magna also sees the relationship between Chrysler's current managers as being important even with different owners, a fact that puts Magna at an advantage.

An interesting side note about Magna being the number one suitor of Chrysler is CEO Frank Stronach's position on unions - he is completely against them. Like the other members of the Big 3, Chrysler's plants are unionized, nevertheless, the UAW and CAW (Canadian Auto Workers) have stated that they'd rather that Magna be owner than any of the other financial institutions, if the unions themselves can't buy the firm out. Whether or not Magna restructures the plants to get rid of unions is yet to be seen, but we doubt that such a thing would happen considering that, as it stands, half of the members on the advisory board belong to the unions.

Though the owners of Chrysler Group are set to switch hands, it wouldn't result in a total breakup between the two entities. The German side intends to own a minority stake of Chrysler, and will play the role as the manager for future projects where parts and components are shared. Magna believes that strengthening ties between itself and Daimler is important to ensure a good relationship between the brands. At the rate it's currently going, the sale of Chrysler is expected to take place by the end of June.