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Old 01-12-2007, 02:12 PM   #29
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Is Magna eyeing Aston?

Is Magna eyeing Aston?
My brand, or yours?: Auto-parts maker could buy tony British brand

Nicolas Van Praet
Financial Post

Friday, January 12, 2007

Canadian auto-parts maker Magna International Inc., reported to be in the hunt for British luxury carmaker Aston Martin, said yesterday it would not consider assembling a vehicle under its own name but left the door open to buying another nameplate.

"We'll just see what develops," Magna president Mark Hogan said in response to a question by Merrill Lynch analyst John Murphy asking if Magna would considering owning a brand to assemble a vehicle.

Asked by another analyst why Magna would be interested in Aston Martin strategically, Mr. Hogan declined to answer in detail. "Aston's an interesting brand," he said. "We'll leave it at that."

Magna International's Steyr unit in Graz, Austria, assembles complete vehicles under contract for automakers that include Daimler Chrysler AG, BMW AG and General Motors Corp. Manufacturing experts say it may have the capability to add more manufacturing.

But owning a brand would add a new dimension -- that of selling and servicing vehicles.

"I don't know if there's enough volume with Aston Martin alone to take all the other things that would need to be purchased with it," said Catherine Madden, manufacturing analyst with Global Insight Inc. in Lexington, Mass.

"The big challenge is the amount of investment, how long it will be to get a return."

Aston sold roughly 6,500 cars globally in 2006. Its newest model was seen in the latest James Bond Film, Casino Royale.

Speculation has grown in recent days that Magna may be taking a run at Aston, now owned by Ford Motor Co.

The Sunday Telegraph in London, citing unnamed sources, reported that Magna is on a short list of bidders for the automaker. James Packer, Australia's richest man, is part of a group bidding for Aston, the newspaper said. Other bidders include private equity groups Permira Advisers LLP and Doughty Hanson & Co., the paper said.

Ford executive vice-president Lewis Booth said earlier this week the company is evaluating the bids it has received for Aston, which could fetch in the range of US$1-billion. The Detroit automaker put Aston Martin, whose cars retail for more than US$110,000, up for sale last August in a bid to shore up its finances and focus its stable of more mass-market brands.

Mr. Hogan's comments yesterday to investors in Detroit came as Magna International provided generally flat revenue guidance for the coming year and no earnings guidance.

Sales for 2007 should come in between US$22.9-billion and US$24.2-billion, Magna chief financial officer Vincent Galifi said, lower than analyst expectations.

Restructuring moves the company has made in recent months, including worker buyouts and plant consolidation, would likely result in an unspecified 2006 fourth-quarter charge, Mr. Galifi said.

In future, however, progress revamping underperforming divisions, such as its interiors business, will help Magna this year, he said.

A Magna official declined to specify how many employees the company has laid off and bought out over the last year.

Aurora, Ont.-based Magna International relies on Ford, GM and Daimler Chrysler for roughly three-quarters of its sales and has suffered as those automakers reduced their production. But it is expanding in international growth markets such as Russia, and aims to have up to 15% of its production sales to Asian automakers by 2010.

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