Magna focusing on core business after Opel saga image

Magna International Inc is not looking at taking over any other automakers following the collapse of its deal to buy a stake in General Motors Co’s European operations, the auto parts maker’s co-CEO, Don Walker, said on Thursday.

GM’s board of directors had approved the sale of a 55 percent stake in Germany-based Opel to the Canadian company and its Russian backer Sberbank for 500 million euros after months of negotiations.

But the board reversed its decision late on Tuesday, prompted by improved business conditions and the strategic importance of Opel as a small-car platform for GM going forward.

“We’re not looking at any other transactions in that space,” Walker said in a conference call, responding to a query as to whether Magna might be looking at Ford Motor Co’s Volvo unit or GM’s Saab.

“Right now we’re focusing back on the core business, which is automotive parts, and we have no discussions going on right now on any other vehicle-type acquisitions.”

The shares of Magna, which reported a surprise third quarter profit on Thursday, rose over 10 percent on Wednesday after the GM/Opel deal fell through.

“Most of the analysts are happy to see the end of it (the deal) and it appears in the share price movement, that was the same conclusion in the investment community,” said David Tyerman, an analyst at Genuity Capital Markets.

There was concern among some in the industry that Magna was buying into a cash-burning, market-share losing operation, Tyerman said.

Other risks associated with the deal included Magna’s lack of experience in running an automaker, especially on the sales and marketing side, and the possibility of its parts business suffering as the company began competing with automakers it supplies with parts.

Foto: Reuters/ Ina Fassbender
Source: Reuters