Shares of DaimlerChrysler AG (NYSE: DCX) roared to a new 52-week high on news that Magna International Inc. (NYSE: MGA) – a Canadian auto supplier – and a private equity partner would bid for Chrysler. Chrysler is the German company’s U.S. division.
The shares closed up $4.76 (6.13 percent) at $82.36 per share. The volume of shares traded today was enormous – over 6 million shares versus an average volume of around 1 million.
KeyBanc Capital Markets analyst Brett Hoselton said in a note to investors that Magna and the private equity group have written a joint letter offering to buy Chrysler for $4.6 billion to $4.7 billion. Hoselton’s note did not identify Magna’s private equity partner, but said the company appears to have been in contact with Cerberus Capital Management LLC and Blackstone Group – two firms that have reviewed Chrysler’s finances.
Hoselton described the bid for Chrysler as a low one and said the company knows that is unlikely to prevail. “The company also sees it as an opportunity to purchase an inexpensive stake in the automaker should other bidders retreat,” his note said.
This bid talk comes amid rumors that someone or some group will soon make a multibillion dollar offer. According to a press release, a company official said, however, that no news on a potential sale is imminent and no action is expected at the company’s annual shareholders meeting on April 4.
Also according to a press release, Magna’s top executive has confirmed his company’s interest, but a company spokeswoman on Friday would not comment on the possible bid for one of its largest customers. “We continue to review potential alternatives regarding the future of the Chrysler Group. Discussions about this matter are strictly confidential and will not be disclosed publicly, nor will the company comment on speculation related to those discussions,” spokeswoman Tracy Fuerst said.
In after hours trading today, DaimlerChrysler shares were down 31 cents to $82.05 per share.