Magna's Stronach welcomes Russian partner

Magna International chairman Frank Stronach has invited a Russian billionaire into the inner sanctum of the auto parts giant he founded.

Magna,based in Aurora, Ont.,has received a$1.54-billion US investment from Russian Machines, a company controlled byOleg Deripaska.

Deripaska isone of Russia's wealthiest men and the controlling owner of Russia's second-largest automaker, GAZ. Only 39 years old, Deripaska has close ties to Russian President Vladimir Putin.

"I think Russia is a very important market for us so we would like to have a Russian investor," Magna chairman Frank Stronach said Thursday in Toronto, where the company's annual meeting was held.

Under the deal, Deripaska's holding company, Russian Machines, will indirectly acquire 20 million Magna voting shares at $76.83 US a share.

The Stronach Trust, which holds the Stronach family's voting control in Magna, and Russian Machines will both get to nominate six directors, including at least four independent directors.

"We think there is a great market [in Russia], where we have a better chance to participate," Stronach told CBC News Business when asked why he opted to move into Russia instead of other growing markets in India and China.

Profits higher

The announcement of the Russian deal came as Magna reported higher first-quarter profits despite the weakness being experienced by North American automakers.

Magna said it made $218 million US, or $1.96 a share, on record sales of $6.42 billion US. A year earlier, the company made $212 million US, or $1.91 a share, on sales of $6.02 billion US.

The company saidduring the quarter its North American and European average dollar content per vehicle increased by10 per cent and 14 per cent, respectively, over last year.

North American vehicle production declined by seven per cent while European vehicle production increased by six per centover last year.

Magna is still awaiting word on its proposal to DaimlerChrysler AG to buy the Chrysler group. Magna has teamed up with Onex Corp. on its bid, purported to be worth about $4.7 billion US.

Stronach said Wednesday he expects to hear more about his Chrysler Group bid in "a few more weeks."

Asked how the addition of a new Russian investor will affect his company's bid for Chrysler, Stronach said it will have no bearing, other than to add more money to Magna's bank account.

If Magna is succesful in acquiring Chrysler, Stronach said he hopes that Daimler will retain some stake in it.

Shares jump 7 per cent

Shares ofMagna Internationaljumped more than seven per cent on Thursday, after it announced the Russian investment and higher earnings.

Shares rose $6.42 to close at $93.65 on the TSX. The shares traded as high as $96.95 earlier in the day a 52-week high.