DaimlerChrysler Jumps Amid Deal Talk

Updated from 11:13 a.m. EDT

Shares of DaimlerChrysler(DCX) spiked Friday after a Wall Street analyst said auto-parts supplier Magna International (MGA) teamed up with a private-equity firm to offer $4.6 billion to $4.7 billion for the German automaker's U.S.-based Chrysler business.

KeyBanc Capital Markets analyst Brett Hoselton, citing unnamed sources, said in a report that Magna and the firm sent a joint letter of interest to DaimlerChrysler. Under the proposed deal, Canada's Magna is looking to take up to a 25% stake in Chrysler, Hoselton said.

In the report, Hoselton noted that Magna views the bid as relatively cheap.

"While Magna views its offer as low and unlikely to prevail, it also views it as an opportunity to purchase an inexpensive stake in the automaker should other bidders retreat," Hoselton said.

Hoselton didn't name Magna's private equity partner. Cerberus Capital Management and a team led by Blackstone Group and Centerbridge Partners LP have also been named as front-runners in negotiations for the struggling auto manufacturer, according to a report from Bloomberg News that cited two sources familiar with the talks.

DaimlerChrysler spokesman Mike Aberlich said that no news is imminent on any negotiations, and he declined to comment further.

The automaker's shares were recently up $4.93, or 6.4%, to $82.53, on more than five times their average trading volume.

The company signaled a possible sale of Chrysler in February after the U.S. business recorded an operating loss of $1.48 billion for 2006, compared with the operating profit of $2.02 billion in 2005. Its revenue slid to $62.2 billion from $66.1 billion.

In response, DaimlerChrysler unveiled a massive restructuring effort for Chrysler, including layoffs and plant closings in North America. The plan mirrors those pursued last year by Chrysler's counterparts in Detroit, General Motors(GM) and Ford(F).

The company's CEO, Dieter Zetsche, also said Chrysler is exploring "all options," sparking a frenzy of speculation about potential deals involving private-equity buyers and even GM.

Chrysler CEO Tom LaSorda reportedly told dealers at a meeting early this week that a decision on a sale may come soon.

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