A controversial Russian aluminum magnate announced plans to buy a hefty stake in a Canadian company that is a leading candidate to bid for DaimlerChrysler's Chrysler Group, a surprise move that could complicate the auction for the auto maker and raise new concerns about foreign investment in the U.S.
Oleg Deripaska's plan to buy a $1.54 billion stake in Magna International could provide vital cash for any Chrysler bid made by the Canadian auto-parts maker, although the Russian's past offers a potential red flag for regulators and political leaders who will scrutinize the deal. U.S. law-enforcement officials suspect Deripaska may have ties to Russian organized crime. He has consistently denied participating in any criminal activity.
Announcing the deal yesterday, Magna officials said the tie-up with Deripaska is part of the auto supplier's goal to expand in fast-growing markets such as Russia, and isn't related to the planned bid for Chrysler. A spokesman for Deripaska's Basic Element holding company said his company would consider the Chrysler deal the way any other Magna shareholder would.
Magna said the proposed Basic Element transaction is subject to court and regulatory approvals in Canada.
Though owned by a German parent, Chrysler is still considered a U.S. company in that it continues to design, develop and manufacture cars and trucks in North America and employs about 80,000 people here. If Chrysler does work for the Defense Department, or has operations that are deemed of national-security interest, the deal could be subject to review by the Committee on Foreign Investment in the U.S.
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