FRANKFURT, Germany - Magna International Inc., a Canadian auto parts maker, is in advanced talks with DaimlerChrysler AG about a possible purchase of the money-losing Chrysler unit, a German newspaper reported Tuesday.
The news prompted one analyst to downgrade Magna's stock.
The Frankfurter Allgemeine Zeitung reported that Aurora, Ont.-based Magna is in continuing talks with the German-American automaker about acquiring a majority stake in the Chrysler division, but the paper did not name its sources. The paper said DaimlerChrysler would keep a minority stake in the U.S. division.
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 likely would make a deal for the division. Magna chief Frank Stronach said last week his company was in talks with the Onex Corp. conglomerate about teaming up on a bid.
Merrill Lynch analyst John Murphy lowered his rating on Magna's stock from "buy'' to "neutral'' on Tuesday, saying the risks from the potential acquisition of Chrysler were disconcerting.
Billionaire investor Kirk Kerkorian, who tried to take control of Chrysler in the 1990s, has made a $4.5-billion bid. DaimlerChrysler, however, has been reported to be in meetings with other private equity firms -- including Cerberus Capital Management LP and a consortium of investors led by Blackstone Group -- but apparently has not set up a similar meeting with Kerkorian's Tracinda Corp.
Shares of DaimlerChrysler were down nearly half a percent to US$82.19 in Frankfurt trading Tuesday.
On the Toronto stock market, the firm's Class A sahre were down $1.63 at C$87.16.
