Magna shares rise seven per cent after Opel deal dashed
Published Thursday November 5th, 2009
TORONTO - Magna International (TSX:MG.A) dodged what some industry observers say could have been a business disaster this week when General Motors Co. dashed plans to sell its money-losing Opel division to a Magna-led group that wanted to build cars and sell them in the growing Russian market.
Stock in the auto parts producer jumped more than 10 per cent on Wednesday as investors appeared to heave a sigh of relief that Magna, already Canada's largest parts company, would not become the next major automaker.
The deal held promise for Magna, but also lots of risk, especially if the European transaction began to undermine Magna's traditional parts sales to Volkswagen and others who would see Opel as a competitor.
"Investors were focused on the negative (aspects) and there were quite a few that were obvious," said David Tyerman, an auto parts analyst at Genuity Capital Markets.
"Those have all gone away."
More Business
Search Articles
More CE Network Sites & Partners:
