AUTOS
Magna’s Stronach adds Opel to his empire
Published: May 31, 2009, 12:30 am
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TORONTO — Frank Stronach, the Canadian owner of auto parts maker Magna International, once referred to himself as “king” at one of his shareholder meetings. He’s now added another property to his business empire: General Motors Corp.’s Opel unit.
After the second round of high-level talks in Berlin in two days, Germany’s finance minister said Saturday that a plan was approved for Magna to move ahead with Opel’s rescue.
The deal comes as no surprise to those who have followed Stronach’s career.
“Frank’s looking to put a cap on his career, build Frank up, build his legacy up. Frank’s an egomaniac, so whenever Magna does something, you have to wonder, what’s in it for Frank,” said Wayne Lilley, author of “Magna Cum Laude,” an unauthorized biography of Stronach. “As someone who is always looking to expand his empire, this Opel deal falls right into place.”
The German government and several state governments will provide a $2.1 billion bridge loan for the deal, part of which will be available immediately. Parliamentary committees in two German states must still approve the financing. That is expected Sunday.
Under the agreement, Magna, Canada’s largest auto parts maker, will take a 20 percent stake in Opel, and the Russianowned Sberbank will take a 35 percent stake, giving their consortium a majority. GM will retain a 35 percent holding, while the remaining 10 percent will go to Opel employees.
Magna did not immediately respond to calls for comment.
Acquiring Opel is a major strategic move for Magna, which has been hurt by the troubles in the North American auto market, especially at its Detroit Three customers—GM, Ford Motor Co. and Chrysler LLC — which are closing plants and slicing vehicle output.
For Stronach, the acquisition of Opel is the biggest deal in his company’s history and cements his legacy as one of Canada’s most globally ambitious executives.
The deal provides Magna with a major vehicle-assembly capacity to cash in on the lucrative Russian car market, which could soon become the biggest in Europe.
The acquisition also takes Stronach back to his European roots.
The son of a staunch Communist, Stronach, 77, grew up a poor boy eating suppers of cornmeal. He moved to Canada from war-torn Austria in 1954 with about $40 in his pocket. Three years after immigrating, he started a tool-and-die business, Multimatic Investments Ltd., which expanded into the production of automotive components.
By 1959, Stronach and business partner Burt Pabst acquired their first auto parts contract: 300,000 sun visor brackets for General Motors. Ten years later, Multimatic merged with Magna Electronics Corp. Ltd., and subsequently became Magna International, of which Stronach is chairman.
More than 40 years later, Magna International is a global automotive empire with 326 factories, engineering centers and sales offices.
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