Magna Steyr In Talks With DaimlerChrysler To Acquire Eurostar Facility.

Magna International Inc. said that its Magna Steyr Group has entered into negotiations with DaimlerChrysler concerning the acquisition of its Eurostar facility, which is adjacent to Magna Steyr's existing assembly operation in Graz, Austria.

The Eurostar facility currently assembles the Chrysler Voyager minivan and PT Cruiser for markets outside North America. Under all the alternatives being discussed, a majority of Chrysler products would continue to be assembled within the combined Magna Steyr and Eurostar facilities at Graz thereby increasing the efficiency of production of DaimlerChrysler products, the companies said in a statement.

"We are very pleased with the opportunity to potentially take over the adjacent Eurostar facility. This acquisition will further strengthen our longlasting and mutually beneficial relationship with DaimlerChrysler by continuing the use of the jointly established knowhow at Magna Steyr in contract manufacturing of Chrysler and Mercedes Benz products," said Siegfried Wolf, President and CEO of Magna Steyr. "Furthermore, it allows Magna Steyr to make use of the total assembly capacities at Graz efficiently and to realize operational synergies to further improve our competitive position."

As the potential acquisition of the Eurostar facility could have a substantial impact on Magna Steyr's future business prospects, Magna and Tesma International Inc. said that they have agreed not to proceed at this time with the proposed merger of Tesma with the Magna Steyr Group. The parties said they intend to re-evaluate the opportunities for a merger or other strategic alternatives as further details evolve concerning the Eurostar transaction.

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