Russian support has allowed Magna to rise above the rest
OUTBIDDING rivals Fiat, Brussels-based IHJ International and Beijing Automotive Industry Corp (BAIC) to secure the acquisition of Opel and Vauxhall was a coup for Magna’s owner, Frank Stronach. It takes him back to his European roots, and gives the company the opportunity to milk the ever-expanding Russian car market.
Stronach is an Austrian émigré who came to Canada in 1954 with C$40 (£22) in his pocket. He built up the car parts and assembly group, and today employs 74,350 people internationally. At the end of 2008, Magna had operations in 25 countries.
Last year, Stronach – who has a net wealth of C$723m – announced he was sharing control of Magna with Russian oligarch Oleg Deripaska. The Russian ploughed $1.54bn into the car-maker to help expand his own Russian car business, OAO GAZ.
But the deal to share Magna collapsed when Deripaska said he had been forced to concede his share of Magna to bankers.
But Gaz, along with Russia’s state-run Sberbank, backed Magna’s bid for GM Europe. Stronarch has said it wants Opel to gain 20 per cent of the Russian market in the short term. In keeping with Magna’s quirky “employee charter”, he said 10 per cent of the new company would go to Opel employees. In the quarter to the end of March, Magna made a loss of $200m.