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Magna-Chrysler talks heat up

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FRANKFURT, Germany - Canadian auto parts maker Magna International Inc., (TSX:MG.A) is in advanced talks with DaimlerChrysler AG about a possible purchase of its Chrysler unit, a German newspaper reported Tuesday.

The Frankfurter Allgemeine Zeitung reported that the Aurora, Canada-based company is in continuing talks with the German-American automaker about acquiring its money-losing U.S. unit, but did not name its sources. The paper also said that DaimlerChrysler would keep a minority stake in Chrysler.

DaimlerChrysler did not comment on the report.

Since DaimlerChrysler announced on Feb. 14 that it was considering all options for its troubled U.S. unit, speculation has mounted that private equity groups would likely make a deal to acquire the division.

General Motors Corp. was reportedly interested in making a bid for Chrysler, but the focus instead has centred on Magna and a pair of private equity groups: Cerberus Capital Management LP and a consortium of investors led by Blackstone Group.

Billionaire investor Kirk Kerkorian, who tried to take control of Chrysler in the 1990s, has made a US$4.5 billion bid. DaimlerChrysler, however, reportedly is meeting with the private equity firms but has not set up a similar meeting with Kerkorian's Tracinda Corp.


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