Deripaska ties up with Magna…with one eye on Chrysler?

Oleg Derispaska, the oligarch behind Russian aluminium producer RusAl (now UC RUSAL after the merger with SUAL), has announced a strategic alliance with Canadian automotive parts supply company Magna, which is one of several entities pursuing US car giant Chrysler.

Magna and Deripaska’s Basic Element yesterday announced a $1.54 billion investment by the Russian company in Magna aimed at forming a strategic alliance in developing Russia’s automotive sector.

Although Deripaska is better known in the metal markets for his aluminium interests, Basic Element’s Russian Machines subsidiary is a major player in Russia’s emerging transport sector, controlling Russia’s second-largest automotive manufacturer GAZ Group, airplane manufacturer Aviacor and train manufacturer Abakanvagonmash.

Under the announced deal Russian Machines would buy around 18% of Magna’s Class A shares, but would also get around 42% of the shares in a new holding company that will be formed to run Magna.

Both companies yesterday stressed that the focus of the deal was the Russian automotive sector.

"This investment will accelerate Magna's strategic efforts to capitalize on the growth opportunities within the Russian and other automotive markets," Magna said.

"We are always pursuing ways to advance our leading position within the Russian automotive sector," commented Oleg Deripaska, adding: "Our partnership with Magna gives us unique competitive advantages and significant growth potential within domestic and neighbouring markets."

He then went on to say that "we have already had excellent cooperation in our projects in Russia, and also believe that Magna, as a truly global company, will help us achieve our international goals."

Those last words—"international goals"—may be worth highlighting since despite the emphasis on the Russian market, the injection of $1.54 billion may do no harm to Magna’s interest in taking some sort of participation in Chrysler. Magna has suggested it is only looking for a minority stake in the US automotive giant which has been put on the sales block by its German owner DaimlerChrysler, but yesterday’s deal has led to a rash of speculation in the North American press that Magna is forming an alliance to take over the whole company.