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Strategies & Market Trends : Speculating in Takeover Targets
CTG 7.8400.0%Aug 12 12:00 AM EDT

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To: richardred who wrote (1068)1/13/2012 10:29:04 AM
From: richardred  Read Replies (2) of 6377
 
Magna Steps Up Acquisition Hunt

By JEFF BENNETT

Canadian auto parts maker Magna International Inc., flush with cash and with the support of its customers, is intensifying its global search for acquisition targets this year.

The company aims to scoop up smaller parts-suppliers in China and Europe if a slowdown in that region finally triggers a consolidation in the auto industry.

Chief Executive Don Walker said the number of calls from its automotive customers to consider potential targets is growing. Auto makers are spooked over the financial weakness of some companies that provide parts or technology, he said.

"The acquisitions are 100% our decision but I would say about 50% of this companies we consider are suggested by our auto maker customers," Mr. Walker said on the sidelines of the North American International Auto Show in Detroit on Thursday.

Magna, which made about 10 acquisitions around the world last year, is sitting on about $1.2 billion cash and feeling the heat from investors who want that cash to be put to use.

The company, meanwhile, needs to continue developing more cutting edge products to fuel its growth. Mr. Walker said he would only use the cash to buy suppliers and has no interest in buying a car maker.

Three years ago Magna was a member of a consortium that had German government backing for a deal to buy General Motors Co.'s European Opel auto unit; GM decided not to pursue the deal, concluding Opel was key to maintaining a global business.

The potential purchase stirred auto makers' ire with some saying they would move their proprietary business away from Magna if it became a competitor. In addition to supplying parts to auto makers, its Magna Steyr unit in Austria has assembled cars for PSA Peugeot Citroën, BMW AG and others.

"We will not become a competitor to our customers," Mr. Walker said.

Separately, Mr. Walker said he continues mulling a plan to build another Magna Steyr-like assembly plant somewhere else in the world.

Magna for years has talked about building another assembly plant but Mr. Walker said such a move appears more promising as auto makers continue talking about building and selling more lower volume niche cars.
online.wsj.com
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